Paytm Shares Jump 6% After Getting RBI Approval as Payment Aggregator

On Tuesday, Paytm shares jumped 5.9 percent, touching a day’s high price of Rs 1,187 per share on NSE after One 97 Communications received an in-principle nod from the Reserve Bank of India (RBI) to operate as an online payment aggregator through its subsidiary Paytm Payments Services Limited (PPSL). The RBI’s letter dated August 12, 2025, marks a major regulatory milestone for Paytm after a turbulent period, granting the fintech the crucial approval to onboard new merchants, expand payment volumes, and boost revenues following the Payment and Settlement Systems Act, 2007. This approval also lifts the nearly three-year ban on new merchant onboarding, which had significantly restricted Paytm’s growth trajectory since November 25, 2022.

This breakthrough reverses RBI’s earlier rejection of Paytm’s payment aggregator licence application due to non-compliance with foreign direct investment norms, a situation further complicated by regulatory scrutiny and actions against its banking arm. In 2024, the RBI ordered Paytm Payments Bank to cease onboarding new customers and to halt certain account operations, following persistent non-compliance, material supervisory concerns, lapses in KYC norms, and alleged FEMA violations. These regulatory hurdles resulted in money laundering probes, ED raids, account freezes, and a drop in customer confidence, casting doubts over Paytm’s operational stability and regulatory compliance.

The recent clearance does come with conditions. PPSL must undertake a comprehensive system and cybersecurity audit, to be submitted to the RBI within six months, failing which the authorisation will lapse automatically. The scope of permitted activities is narrowly defined, requiring strict adherence to Pay Aggregator regulations and excluding payout transactions routed through escrow accounts designated for aggregator operations. Compliance with shareholding norms and prior-approval requirements in case of any future changes in ownership remains mandatory.

Despite the compliance overhang, Paytm has reported a strong financial turnaround in the Q1FY26. For the recent quarter, Paytm posted an operating revenue of Rs 1,918 crore, registering a robust 28 percent growth year-on-year. Its net profit stood at Rs 122 crore, a stark contrast to a net loss of Rs 840 crore in Q1FY25, making this the company’s first time profit at the consolidated level. Contribution profit soared 52 percent YoY to Rs 1,151 crore, with a healthy contribution margin of 60 percent. Merchant subscription devices hit an all-time high of 1.30 crore, demonstrating Paytm’s resilient leadership in merchant payments. Cost control initiatives were crucial, as marketing and promotional expenses dropped sharply, helping drive profitability even amidst regulatory restrictions. The end-of-quarter cash balance was Rs 12,872 crore, reflecting strong capital flexibility following monetisation of non-core assets.

A segment-wise revenue split shows payment services contributed Rs 1,044 crore, up 18 percent YoY, and financial services, driven mainly by merchant lending, surged to Rs 561 crore, up 100 percent YoY. The company made strategic choices to slash costs, sharpen collection performance in loans, and focus on high-margin merchant payments. However, consumer lending remains subdued due to macroeconomic headwinds and earlier regulatory actions, though the company is preparing to reintroduce products like mobile wallets and BNPL soon.

Management commentary is optimistic. Paytm’s leadership expects continued improvement across all profit metrics in the coming quarters as regulatory hurdles decline and core operations gain momentum. The company remains focused on operational efficiencies, ramping up sales productivity, expanding merchant device deployment, and leveraging AI-led cost discipline to strengthen operating leverage. Paytm views the payment aggregator licence as an opportunity to reinforce its market position in digital payments, reduce regulatory uncertainty, and scale merchant acquiring. Overall, management’s outlook is positive, projecting further profitability improvements, sustainable growth in revenues, and deepening of its merchant payment franchise.