Paytm shares rise over 4% on report of AI expansion

As per the latest business developments, Digital payments pioneer Paytm shares rose over 4% on September 9 after a note stated the firm is expanding to a new business, jumping on the agentic AI bandwagon to accelerate a rebound in topline expansion.

The firm will start selling artificial intelligence agents to enterprise customers, betting on rising demand for such bots that can automatically handle a variety of workloads and tasks with minimal supervision, people familiar with the matter told Bloomberg. That marks a major departure from its core business of handling digital payments for consumers and businesses, and offering a slate of related services like loans and investing.

The new Paytm Intelligence, or Pi, service can deploy AI agents across functions such as sales, customer service and operations, the people stated, asking not to be named as the information is private. Pi will initially target banks, smaller lenders, insurers and other financial institutions in India and the United Arab Emirates, the people stated.

Paytm has overcome regulatory hurdles that threatened its business model two years ago, giving it confidence to attempt a pivot into becoming an AI provider. The firm has returned to topline expansion and touched profitability — yet tough competitive pressure in digital payments has left it with limited expansion possibilities in that market.

At 11:55 am on September 9, Paytm shares were trading 4.2% elevated at Rs 1,739.2 apiece.

Digital payments firms the world over are embracing AI. Stripe LLC last month agreed to buy OpenRouter Inc. to propel deeper into the infrastructure powering the AI boom. Klarna Group Plc has struck AI pacts with Google and OpenAI.

At the core of Pi is a financial services AI model that Paytm has been developing for around two years. The model, built on massive numerical data sets accrued through years of processing financial transactions and analyzing customer behavior, is capable of predicting fraud, credit-worthiness and the credibility of a claim, the people stated.

The first wave of fintechs in India are maturing — from a period of rapid expansion in customers and transactions — into finding new ways of making money through their technology and data. Payments businesses in particular face pressure to build elevated-margin topline streams as competitive pressure intensifies and return on basic services is thin.

For Paytm, Pi marks the first big business pivot that brings together payments intelligence, behavioral models, voice technologies and workflow automation, the people stated. Its AI agents can assess customer needs, run business campaigns, help win over new customers as well as cross-sell to existing clients, they stated.

“AI adoption is set to drive sharp performance divergence across fintechs: leaders will use proprietary data and model feedback loops to sharpen their edge while laggards face margin pressure as AI-native rivals reset benchmarks for speed, accuracy and personalization. The bigger unlock will come from embedded models and automation that cuts cost-to-serve and enables new AI-fuelled businesses like agentic commerce projected to be $1.7 trillion by 2030," stated Diksha Gera, an market observer.

Paytm, publicly listed as One97 Communications Ltd., has already begun offering Pi to a few customers and is planning to expand it to others soon, the people stated. Representatives of the firm didn’t respond to a request for comment.

Paytm has stated it plans to be an aggressive adopter of AI across its operations. It intends to hire around 4,000 people by early next year as part of a move to expand its merchant network and AI-fuelled product offerings.

Founded by Vijay Shekhar Sharma in 2010, Paytm began by offering prepaid mobile recharges but soon focused on digital payments and banking. A currency note ban in late 2016 helped the firm cement its place as a frontrunner in India’s fintech arena where it now competes with rivals including Walmart Inc.-controlled PhonePe and Alphabet Inc.’s Google Pay.

Shares of the firm have more than doubled during the past two years as it trimmed costs and started to churn out consistent earnings.