Paytm Drops Large Insurance Merchant Over Negative Contribution, Targets AI Revenue in Three Quarters

Paytm has ended its contract with a large insurance merchant that was weighing on contribution margins, founder and chief executive Vijay Shekhar Sharma said on the company's earnings call. NDTV Profit reported that the company also expects AI-related revenues to begin showing up over the next three quarters.

Paytm is an Indian digital payments and financial services platform serving 7.7 crore monthly transacting consumers and more than 44 million merchants through UPI, wallet, Soundbox, POS, payment gateway and financial services distribution.

Why Paytm Ended The Insurance Contract

Sharma said Paytm had concluded its contract with a large insurance company as it prioritises merchants that contribute more meaningfully to its business. Madhur Deora, president and group chief financial officer, said the insurance merchant had been a drag on contribution margins and generated negative contribution.

Paytm is also looking to expand its Soundbox merchant base with a greater emphasis on creditworthy businesses. Sharma said the company expects its number of net active monthly merchants to increase, adding that around 10 million of its 15 million merchants are good-quality customers.

On artificial intelligence, Sharma said it would take at least three quarters for AI-related revenues to begin showing up. He attributed better customer acquisition efficiency to the use of the technology, and Paytm plans to spend more on customer acquisition as it pursues further growth in its user base.

Deora said the recent increase in technology and infrastructure expenses was largely driven by one-time costs, including the migration and consolidation of two technology stacks. Some migration work remains unfinished, meaning these costs may not decline in the December quarter.

Paytm's Full-Year Profit And Revenue

According to akta.pro company records, Paytm's operating revenue for FY26 was ₹8,437 crore, up 22% year on year from ₹6,914 crore in FY25. Total income including other income was ₹9,291 crore.

The same records show Paytm posted its first full-year net profit in FY26 at ₹552 crore, swinging from a loss of ₹663 crore in FY25. FY26 EBITDA was positive at ₹502 crore, compared with a loss of ₹1,506 crore in FY25.

Paytm's Earnings And Product Run-Up

On October 26, 2026, The Times of India reported that Paytm had posted a 976% year-on-year profit increase to ₹226 crore for the September quarter. On October 21, 2026, CNBC TV18 reported that Paytm and AU Small Finance Bank launched a co-branded RuPay credit card with no joining or annual fee, offering up to 5% rewards on Paytm Travel and Gold purchases and up to 12 complimentary family airport lounge visits per year.

On October 13, 2026, CNBC TV18 reported that a Goods and Services Tax demand against Paytm subsidiary First Games Technology was reduced from ₹5,712 crore to approximately ₹704 crore by tax authorities in Noida.

When Paytm Expects The UPI Framework To Clarify

Deora said the impact of the merchant discount rate framework would become clearer only after its implementation in the December quarter. He said he does not expect changes in the transaction mix to materially alter UPI GMV, adding that the framework would not change the applicable rates.