Paytm : has indicated that any financial impact arising from the conclusion of the Reserve Bank of India’s Payment Infrastructure Development Fund scheme is expected to be balanced over time through higher revenues and sharper sales execution. The company conveyed this outlook in a recent clarification to stock exchanges, aiming to address investor concerns around the potential non-extension of the incentive programme.
In its filing, One 97 Communications Ltd explained that it currently recognises incentive income under the PIDF scheme based on qualifying expenditure incurred on payment acceptance infrastructure. This includes devices such as Soundboxes and electronic data capture machines deployed to expand merchant acceptance of digital payments across India.
The PIDF scheme was designed as a time-bound initiative to encourage the rapid rollout of digital payments infrastructure, particularly in regions with low penetration. These incentives were linked to the deployment of hardware rather than transaction volumes, helping companies accelerate adoption in the early stages of market development.
Addressing the scenario in which the PIDF scheme is not extended beyond its current validity, Paytm stated that it expects to offset any decline in incentive income through a mix of stronger revenue growth and more targeted sales efforts. The company emphasised that its sales execution strategy is becoming increasingly focused, allowing it to drive monetisation more efficiently from its existing merchant base.
Management believes that as the platform scales, the reliance on external incentives naturally reduces. Instead, growth is expected to be driven by higher transaction volumes, broader adoption of value-added services, and deeper engagement with merchants already on the platform.
The clarification comes at a time when Paytm is showing signs of a broader operational turnaround. Over recent quarters, the company has demonstrated improving operating leverage and sequential profitability gains. These trends suggest that Paytm’s cost structure is stabilising while revenues continue to grow at a faster pace.
Market observers note that incentive schemes like PIDF are typically introduced to catalyse early adoption. Once platforms reach sufficient scale, they are expected to sustain growth independently through organic demand and operational efficiencies rather than policy support.
The PIDF scheme was valid until December 31, 2025, and was aimed at accelerating the deployment of digital payments infrastructure in Tier-3 to Tier-6 cities, as well as underserved regions. These included the Northeastern states and the Union Territories of Jammu, Kashmir and Ladakh, where digital payment acceptance was relatively limited.
For the six months ended September 30, 2025, Paytm recognised incentive revenues of ₹128 crore under the programme. While this contribution was meaningful, the company maintains that it represents a declining proportion of overall revenues as core payment and financial services businesses expand.
Brokerage firm Investec Equities highlighted Paytm’s strong competitive position in both offline and online payments. According to the brokerage, the company commands over half of the market share in Soundboxes, around ten percent in physical point-of-sale terminals, and approximately fifteen to twenty percent in online payment gateways.
This diversified presence positions Paytm to benefit disproportionately from rising adoption of credit-linked payment instruments. Increased usage of credit cards, RuPay credit cards on UPI, and credit lines linked to UPI is expected to support margin expansion over the medium term.
Investec projects payment gross merchandise value to grow at a compounded annual growth rate of around twenty-five percent between financial years 2025 and 2028. With rising credit penetration, net payment margins are expected to improve steadily, driving strong growth in net payment processing revenues.
Despite facing a significant regulatory setback in financial year 2025, when the central bank curtailed its payments bank operations, Paytm’s swift mitigation measures have been widely acknowledged. Analysts also point to the company’s deep technology stack and long-standing merchant relationships as sources of long-term pricing power and operating leverage.
With this disclosure, Paytm has sought to reassure investors that the conclusion of the PIDF scheme does not alter its long-term growth trajectory or profitability outlook, reinforcing confidence in its ability to scale sustainably without reliance on temporary incentives.
