New Delhi, March 5 Noida-based payments major Paytm has gained a significant advantage in its monetization journey compared to its peers, driven by a more diversified mix across high-monetization categories such as merchant lending and financial services, which has helped it improve profitability and position itself strongly within India’s evolving fintech landscape, according to a BofA Global Research report.
BofA says Paytm continues to lead in medium to high-monetization segments such as merchant payments and lending, putting it ahead of rivals with a diversified revenue mix.
The report notes that while consumer payments remain a low-monetization area, merchant payments and lending, as well as financial services distribution, continue to be medium to high-monetization segments for payment platforms.
In this context, Paytm's revenue mix stands out, with a significantly lower dependence on consumer payments and a higher contribution from merchant payments and financial services distribution.
This diversified mix has enabled stronger margin progression and a more balanced earnings profile for Paytm, positioning it significantly ahead of its peers in its monetization journey.
For Paytm, payments accounted for only 55 per cent of its total revenues in the first half of FY26, compared to 87 per cent for its closest rival, highlighting a stronger cross-selling engine and a greater ability to mitigate regulatory headwinds.
In merchant payment monetization, Paytm was the first to launch the Soundbox to deepen engagement with small merchants, a model that was later replicated across the industry.
The company continues to lead the market in terms of installed device base, and the Soundbox subscription model delivers roughly 60 per cent EBITDA margins, according to the BofA report. This installed base not only drives subscription revenues but also deepens merchant engagement, creating a natural pipeline for credit distribution.
Interestingly, BofA noted that despite operating at a comparable scale, Paytm compares favorably on operating expenditure and depreciation and amortization metrics relative to its peers.
The brokerage also highlighted the Noida-based fintech's growing contribution from lending, insurance, and broking, providing operating leverage beyond the low-yield UPI ecosystem.
In B2B merchant lending, Paytm enjoys a clear first-mover advantage and is well-positioned to sustain its lead, according to the brokerage.
BofA estimates that around Rs 9 billion (Rs 900 crore) of Paytm's lending revenues in H1 FY26 were driven by merchants, underscoring the scale it has achieved in this higher-margin segment.
In contrast, its closest competitor reported around Rs 3 billion (Rs 300 crore) of lending revenues in H1 FY26, underscoring that Paytm's lending scale is roughly three times larger. The report expects the company to maintain its leadership in merchant lending as the ecosystem expands.
The brokerage also points out that Paytm could be among the biggest beneficiaries of key regulatory developments, including potential market share caps in UPI and proposals to provide subsidies only to smaller merchants. Given its strong merchant footprint, such changes could strengthen its competitive positioning.
Beyond payments and lending, Paytm is also expanding its ambitions in wealth management. During its third-quarter conference call, the company said it intends to make Paytm Money one of the top five entities in the space over the next three years.
It has been steadily increasing its market share in active demat accounts and has moved up the rankings, signaling growing traction in the broking and investment segment.
Taken together, BofA’s assessment suggests that Paytm’s diversified exposure to higher-monetization verticals, strong merchant franchise, and improving profitability place it ahead of its peers as India's fintech market shifts from scale-driven growth to sustainable earnings expansion.
