Startup Deep Dive : Paytm — first profit, after the bank ban

One97 Communications, the company behind Paytm, raised ₹18,300 crore in India’s biggest-ever public offering in November 2021, then watched its stock fall 27% on the first day. Nearly five years and one regulatory near-death later, in the year to March 2026, it finally turned an annual profit — ₹552 crore, as per its FY26 results reported by Business Standard and Paytm’s own filings. A company that lost money every year of its public life has, at last, made some.

The profit came the hard way. In early 2024 the Reserve Bank of India effectively shut Paytm Payments Bank, the affiliate that ran much of Paytm’s wallet plumbing, and the group’s revenue fell 31% the following year. What emerged was a smaller, more disciplined company: One97’s revenue was ₹8,437 crore in FY26 (about $879 million; $1 ≈ ₹96.0 as of 18 September 2026), and it is now worth around ₹1.06 lakh crore on the market. This is the story of how a payments pioneer nearly broke, then narrowed itself into profit.

Quick facts

What Paytm actually does

Paytm is a payments company that has become a financial-services distributor. Its core job is to help shops, restaurants and small businesses accept money — through QR codes, its Soundbox audio devices, card machines and an online payment gateway — and to help their customers pay by wallet, card and the UPI system. On top of that rails business, Paytm sells other companies’ financial products: it finds borrowers and routes them to bank and NBFC lending partners, and it distributes insurance and mutual funds. It also runs advertising, ticketing and commerce services.

Its customers are mostly merchants, not consumers. Ordinary users pay nothing to send money by UPI, because UPI carries no merchant fee in India. Paytm’s money comes from the businesses that use its devices and services, and from the banks and lenders that pay it to bring them customers. In plain terms, Paytm sells shopkeepers the tools to get paid, and sells lenders access to the shopkeepers.

The insight: the phone as a wallet

Vijay Shekhar Sharma built One97 Communications in 2000 as a mobile value-added services business — ringtones, news alerts and content — when fewer than ten million Indians were online. The real idea came a decade later. In 2010 he launched Paytm, short for “pay through mobile”, as a way to recharge prepaid phones and pay bills, betting that the smartphone would become the wallet ordinary Indians carried.

What Sharma saw before most was that India would leapfrog cards entirely and go straight from cash to the phone. Cards required point-of-sale machines few small shops could afford; the phone was already in everyone’s pocket. Paytm added a digital wallet, then QR codes a shopkeeper could print for nothing, turning any tea stall into a place that could accept a digital payment. The founding date is a footnote; the bet — that the next payment network would be built on phones, not plastic — is the whole company.

The struggle years

Paytm’s public life began with a fall. Its November 2021 IPO, priced at ₹2,150 a share, valued the company near ₹1.39 lakh crore; on debut day, 18 November 2021, the stock closed about 27% down, wiping out roughly ₹38,000 crore of value in a session, as per Business Standard. Investors who had been promised a growth story wanted profit, and Paytm was still deep in losses.

Then came the regulator. The RBI had already barred Paytm Payments Bank from taking on new customers in March 2022 over supervisory concerns. The heavier blow landed on 31 January 2024, when the RBI ordered the bank to stop accepting fresh deposits and top-ups after a final deadline, later set at 15 March 2024, citing persistent non-compliance, as per Business Standard and Entrackr. Because the bank ran much of the wallet and account plumbing, the order cut into Paytm’s payments business directly: payment-services revenue fell 37% to ₹3,879 crore in FY25, and group revenue dropped 31% to ₹6,900 crore. It was the closest the company had come to a structural crisis since demonetisation had sent it soaring in 2016.

The turning point: the RBI shuts the bank

The event that reset Paytm’s trajectory was the one it did not choose: the RBI’s action against Paytm Payments Bank. Look at the numbers on either side. In FY24, before the order bit, One97 reported revenue of ₹9,978 crore and a net loss of about ₹1,423 crore. The order forced the wallet and bank plumbing to be rebuilt around other partners, and FY25 revenue fell to ₹6,900 crore — a company shrinking, not growing.

But the crisis did what years of investor pressure had not: it forced discipline. Paytm cut costs, narrowed its focus to merchant payments and the distribution of loans, and stopped chasing growth for its own sake. The loss for FY25 nearly halved to about ₹659 crore, and in FY26 the company posted its first full-year net profit of ₹552 crore on revenue of ₹8,437 crore, with EBITDA swinging by about ₹2,008 crore year on year to a ₹502 crore profit, as per its FY26 results. The regulator nearly broke Paytm; the recovery from it is what finally made the company pay.

The money behind it

Paytm raised about $3.16 billion across its private life, as per Tracxn, and two backers shaped it above all. Alibaba and its affiliate Ant Group began investing in 2015 and became the largest shareholder group, at one point holding well over a third of the company; they brought not just capital but the QR-code, merchant-first payments playbook that Ant had built in China. SoftBank’s Vision Fund followed with a $1.4 billion investment in 2017 at a valuation above $8 billion, giving Paytm the scale to blanket India with QR codes and cashback.

Warren Buffett’s Berkshire Hathaway put in about $300 million in 2018 — a rare Buffett bet on a loss-making tech firm, and one it later exited at a loss, a reminder that even patient money found Paytm hard to hold. The company’s valuation peaked near ₹1.39 lakh crore at its 2021 listing and then fell for years; at about ₹1.06 lakh crore in September 2026 it trades below where it went public, even after returning to profit. What each backer changed is clear: Ant made Paytm a payments network, SoftBank made it a giant, and the public market made it accountable.

How Paytm makes money

Money reaches Paytm from businesses and from lenders, not from everyday users. On the payments side, it earns subscription fees from merchants who rent its Soundbox and card machines, a merchant discount rate on card and wallet transactions, and fees from its online payment gateway. The cost against this is the technology, the devices and the incentives it spends to keep merchants on the platform. The part people get wrong is assuming Paytm earns a cut of every UPI payment — it does not, because UPI is free to merchants in India by policy. UPI wins Paytm the relationship; the money is made elsewhere.

That “elsewhere” is increasingly the distribution of financial services. Paytm finds creditworthy borrowers among its merchants and users and passes them to bank and NBFC partners, earning a commission for the introduction and, in some cases, for collection — without, since a 2023–24 reset, carrying much of the credit risk itself. This is a high-margin, asset-light business, which is why the company keeps pointing to it. The margin sits in distribution, not in moving the payment.

The numbers

Three years of consolidated results tell the crisis-and-recovery story in one column. Figures are for years ended 31 March, from company filings reported by Business Standard, Paytm and ScanX. The unit is ₹ crore.

The dip in the middle is the whole point. Revenue fell by nearly a third in FY25 as the Payments Bank restrictions took hold, the sort of drop that usually signals decline. Instead, the loss shrank at the same time — from about ₹1,423 crore to ₹659 crore — because the company was cutting harder than its revenue was falling. By FY26 revenue had recovered to ₹8,437 crore and the bottom line had crossed into profit for the first time. Paytm did not grow its way to profit; it shrank and disciplined its way there.

Where the money actually comes from

Most people think of Paytm as a consumer wallet. The FY26 revenue split points the other way. Payment services brought in ₹4,646 crore, up 20%, and the distribution of financial services ₹2,594 crore, up 52% and by far the fastest-growing line, with the rest coming from marketing and commerce, as per the company’s FY26 disclosures. The number of financial-services customers rose about 36% to 7.5 lakh over the year.

The surprise is where the growth and the margin now live. Payments is the larger, more mature line, but it is a thin-margin business built on merchants, and its consumer face — UPI — earns Paytm nothing directly. The engine the company is betting on is lending distribution: a smaller line today, but growing at more than 50% a year and carrying far better economics because Paytm earns a fee without lending its own balance sheet. The company most Indians know as a wallet increasingly makes its best money as a loan-and-insurance salesman to the merchants it already serves.

The risks

The first risk is the regulator, and Paytm has felt it twice. A business built on payments and lending distribution lives or dies by RBI comfort; the Payments Bank episode showed how quickly an order can remove a chunk of revenue, and any future action on data, KYC or lending practices could do the same. This is a risk the company cannot fully control and has learned not to underestimate.

The second risk is that its cash cow is a public good it cannot monetise. UPI carries no merchant fee, and if that policy holds, Paytm must keep converting free payment relationships into paid services — devices, lending, insurance — fast enough to matter. If lending partners pull back in a downturn, or regulators tighten distribution rules, the highest-margin growth line is the one most exposed. The third risk is competition: PhonePe and Google Pay dominate consumer UPI by volume, and every bank and fintech is chasing the same merchants and the same borrowers. Paytm’s profit is new and thin, and it is being defended in a crowded field.

The takeaway

The transferable lesson is that a crisis can be the only thing that forces a company to become a business. For years, cheap capital let Paytm postpone the question of how it would actually make money; it took a regulator removing part of its revenue to make the company cut, focus and finally turn a profit. When you look at a loss-making firm promising future profitability, ask what would force it to choose — because discipline is rarely volunteered. Paytm’s profit did not come from a new idea. It came from being made to live without the money it used to burn.

Frequently asked questions

Is Paytm profitable?

Yes, for the first time on a full-year basis. One97 Communications reported a net profit of ₹552 crore in FY26, after a loss of about ₹659 crore in FY25 and years of losses before that.

What happened to Paytm Payments Bank?

The RBI ordered it to stop accepting fresh deposits and top-ups from March 2024 over persistent compliance concerns, effectively winding down its operations. One97 has said it had no direct financial exposure and had impaired its investment in the bank.

How does Paytm make money if UPI is free?

UPI earns Paytm nothing directly. It makes money from merchant subscriptions and devices, card and gateway fees, and — increasingly — from distributing loans and insurance for partner lenders and insurers.

Who owns Paytm?

Paytm is publicly listed. Its largest shareholders include Ant Group and SoftBank’s Vision Fund, alongside founder Vijay Shekhar Sharma and public investors.

When was Paytm’s IPO?

One97 Communications listed on 18 November 2021, raising ₹18,300 crore in what was then India’s largest IPO. The stock fell about 27% on its first day.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Business Standard — Paytm FY25 and FY26 results; IPO and listing-day fall, 2021–2026
• Paytm (One97 Communications) — FY24 and FY26 earnings releases and blog, 2024 and 2026
• ScanX / Indian Television — FY26 net profit ₹552 crore and EBITDA swing, 2026
• The Head and Tale — FY25 revenue decline and segment breakdown, 2025
• Business Standard / Entrackr — RBI action on Paytm Payments Bank, 2024–2026
• Tracxn — total funding and investor list
• Inc42 / Crunchbase — SoftBank and Ant Financial funding rounds and valuation
• Fintech Futures — Berkshire Hathaway investment, 2018
• Wikipedia — One97, Paytm and Vijay Shekhar Sharma founding history
• Company market data via stock exchanges — Paytm market capitalisation and share price, September 2026
• Trading Economics — USD/INR exchange rate, 18 September 2026

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