PayU India has achieved a financial turnaround and is on track for full profitability by FY27, says group CFO
He also discusses the impact of the Mindgate acquisition on UPI capabilities and the company’s roadmap to become a universal payments company following recent approvals from the Reserve Bank of India (RBI).
Q1: The first half of fiscal 2026 marks a turnaround for PayU India. Can you detail some of the key financial levers and business decisions that drove this growth? So does this growth look sustainable in the future?
We’ve had a great start to FY26. PayU India’s consolidated revenue rose 20% year-on-year to $384 million in the first half. In rupee terms, we grew 25% YoY, including inorganic growth due to consolidation of Mindgate numbers in April 2025. More importantly, we increased our adjusted EBITDA margin from negative (5%) by half to consolidated EBITDA breakeven in ’26. This growth is due to the disciplined implementation of four priorities for us: (i) More quickly onboarding new digital vendors that emerged from the embargo last year; (ii) Increasing share of wallet in online payment transactions among category leaders; (iii) grow exponentially in the UPI ecosystem; (iv) Diversifying revenue through VAS, SAAS and Credit offerings in the commercial ecosystem through stronger partnerships with banks.
Is growth sustainable? I can definitely say. We have always focused on balancing four vectors for sustainable growth: (i) growing faster than the market by delivering best-in-class products and customer experience, (ii) growing profitably, (iii) managing risks effectively (iv) setting a high bar on compliance. Our payments business has been EBITDA positive for the third year in a row. One-third of our payments revenue now comes from high-margin VAS and Paytech (SAAS) products. As we scaled meaningfully, we gained significant business advantage while investing in cutting-edge technology. While the loan business also turned positive in the second quarter, PayU India is expected to have PBT positive overall in the second half and PAT at the consolidated level is expected to be positive in the financial year.
Q2: PayU’s payments business achieved strong profitability, with VAS and SaaS accounting for 34 percent of revenue. How are you pursuing this margin expansion strategy and what is your outlook for the future?
Along with high competitive intensity in payments, the negative mixed impact of UPI on uptake rates continues to be seen. However, our profitability improvement has been deliberate and sustainable. Our mission is to help sellers sell more and buyers buy more digitally by offering seamless online payment and credit products. We have been successful in providing advanced payment solutions such as standing order/Direct Debit, dynamic currency conversion, instant payments and refunds. We are also focused on cross-selling high margin VAS and SaaS offerings such as bidding engine, WhatsApp commerce, Risk scoring and fraud management, and multi-factor authentication. With the help of Wibmo, we have taken the decisive lead in offering the best payment success rates on credit cards and now we are replicating this playbook on UPI with the help of Mindgate. As a result, our VAS and SaaS business contributed 34% to our payments business revenue in the first half of FY26. We have also ranked first in processing cross-border transactions and have become the first port of call for international online platforms serving Indian consumers. We also bring made-in-India technology to our international customers through our subsidiaries Wibmo and Mindgate, and we’re really excited about the potential of our capabilities in international markets.
Q3: PayU Finance’s results showed solid performance. Can you shed more light on what you’re doing right?
We initially diversified through embedded finance, leveraging our digital distribution footprint and vendor relationships. We are trying to solve the real pain points of digital platforms to help them improve conversions on the demand side through consumer affordability and payment financing; We are also trying to improve conversions on the supply side by offering working capital financing to online sellers on their platforms. This suite of payment and credit offerings, available through our subsidiary PayU Finance, also gives us an advantage for merchants as we help them drive greater conversion in the face of growing demand for digital products and services that remain untapped in the absence of transaction credit offerings.
We shifted our credit strategy in FY25 to serve the commercial ecosystem and digital-only channels and exited the agency/DSA-led model entirely. Our insurance models are driven by data science with machine learning/AI capabilities and are supported by Swiggy, Meesho, PhonePe, Paytm etc. We have created technology integrations to provide cash flow-based lending in partnership with digital ecosystems such as. This has helped us share risk and reward with our partners and has helped us diversify from consumer loans to SME loans as a core offering. This iteration helped us lower credit costs, lower purchasing costs and create a leaner cost-revenue structure. We also moved away from long-term loans by reducing the maturity of loan products to 12-18 months. This asset-light consumption-focused credit model helps us avoid taking asymmetric risk, thus increasing our resilience to credit cycles. As reported, our loan proceeds increased 17% to $96 million in the first half of FY26, driven by new loan issuances of $640 million. Issuance volume was divided between consumer and SME loans in a 65%/35% ratio, respectively. As a result, the credit business turned positive in Q2 FY26 and is on track to achieve 2 per cent ROA in FY26.
Q4: Tell us more about the acquisition of Mindgate. How do you intend to use Mindgate as an infrastructure advantage to leverage PayU’s existing diversified platform?
Mindgate Solutions today powers the UPI payment provider stack of India’s leading banks and processes around 10 billion digital real-time payment transactions monthly. Essentially, this means that it accounts for around 43% of the total UPI transactions in the country. The investment in Mindgate complements PayU’s growth strategy and vision to drive next-generation digital payment innovations for better customer experience and accelerate global adoption of ‘Made in India’ platforms such as RTPS (real-time payment system).
Competitive advantage is both unique and real. PayU’s integration with Mindgate will deliver success rates 200-300 basis points higher than our closest competitors. When success rates are high, seller conversions increase and that’s why they choose us. We’ve done this successfully on credit and debit cards with the help of Wibmo, and now we’re replicating this playbook on UPI with the help of Mindgate. The plan is to play quite aggressively in the UPI ecosystem and co-create many innovative products such as UPI NXT stack, line of credit on UPI and UPI international. On September 25, we doubled our investment in Mindgate, increasing our stake from 43.5 percent to 70 percent, and worked closely with the founders who will continue to lead the company and help unlock synergies between both teams to co-create value for our customers.
Q5: PayU has received unified approval from RBI for online, offline and cross-border payment collection. How are these sweeping regulatory approvals changing PayU’s business landscape and what is the strategy going forward?
Obtaining a unified payments license from the RBI is a testament to PayU’s compliance-first approach and regulators’ confidence in its management. The fact that we are currently among the few players that have all three licenses: online, offline and cross-border creates great opportunities for us. We already had PPI, BBPS and online PA licenses and this comprehensive suite of regulatory approvals will help us become a universal payments company, including cross-border trade, i.e. imports and exports. We not only provide the Indian ecosystem; Our vision is to contribute to the replication of India’s UPI model globally, in partnership with NPCI and Banks.
Our aim is to create a unique payment platform that is the force multiplier of the digital economy in India. We recently strengthened our board with independent director Renu Sud Karnad and three new directors who bring expertise in strategy, M&A, regulatory matters and Artificial Intelligence Technology. Our parent company Prosus invested almost Rs 1000 crore in PayU India in H1FY26 to accelerate its growth enabling us to deliver best-in-class solutions to merchants, consumers and banking partners.
