Paytm Leads in Merchant Acquisition as PhonePe Scales Consumer Bases: Bernstein Report

A Bernstein report released on 3 February showed that Paytm and PhonePe reported similar revenues in the first half of FY26, but their earnings moved in different directions. 

PhonePe posted revenue of ₹3,918 crore and a net loss of ₹1,444 crore. Paytm reported revenue of ₹3,981 crore and a net profit of ₹143 crore during the same period. 

Employee expenses were a key difference. PhonePe’s staff costs stood at ₹2,869 crore, compared with ₹1,305 crore for Paytm. The lower expense base supported Paytm’s profitability. 

Payment Margins Largely Aligned 

The report estimated adjusted payment margins for both companies at around 10.1% in the first half of FY26. The calculation excluded PhonePe’s large peer-to-peer volumes to make the comparison more consistent. 

This suggested that the core payments business of both firms delivered similar margin levels. 

Merchant Business Tilts Towards Paytm 

Both firms have a comparable number of registered merchants, but Paytm has a larger payment device base. Its device count stood at about 13.7 million. 

A higher number of devices typically leads to greater merchant revenue, which has helped Paytm’s earnings performance. 

PhonePe Leads in Consumer Reach 

PhonePe continues to hold a stronger position in the consumer segment. The platform reported around 238 million monthly active users, compared with roughly 75 million for Paytm. 

The report noted that Paytm’s consumer business has faced pressure, and the company has said it is working on new products to improve user engagement. 

Diversification and Subsidy Exposure 

PhonePe’s share of non-payments revenue rose to 18%, up from 7% in FY23. However, restrictions on real-money gaming apps and credit-card rent payments have already reduced its revenue by about 15%. 

Merchant income has grown to 33% of revenue in FY25, compared with 26% in FY24 and 15% a year earlier. The report also noted that 16% of merchant revenue came from government schemes that may not continue beyond 2026. 

Read More: Paytm Share Price in Focus; RBI Imposes ₹18.76 Lakh Compounding Fee Under FEMA! 

Paytm Share Price Performance  

As of February 5, 2026, 11:42 am, One 97 Communications Ltd (Paytm) share price was trading at ₹1,209.90, a 0.28% increase from the previous closing price. 

Conclusion 

The report shows Paytm ahead in merchant monetisation and profits, while PhonePe maintains a larger consumer base. Cost levels and changes in subsidy support may shape results in the coming periods. 

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