India’s digital payments ecosystem is moving beyond a scale-led narrative, with merchant payments emerging as the core driver of revenues and accounting for nearly three-fourths of the industry’s net revenue pool, according to Bernstein’s latest sector primer.

The brokerage estimates the current payments revenue pool at roughly ₹25,000 crore in gross revenues, or about ₹15,000 crore in net revenues. This is projected to expand to nearly ₹65,000 crore in gross revenues and approximately ₹38,500 crore in net revenues by FY30 as digital adoption deepens and monetisation improves across payment layers.

Merchant ownership allows platforms to monetise across multiple layers payment processing fees, online gateway charges, device rentals, credit card acceptance and credit distribution. Models with stronger merchant ecosystems, therefore, generate structurally higher yields.

Within this merchant-led framework, Bernstein identified Paytm as a monetisation leader. The brokerage estimates Paytm’s net payment margin at around 9 basis points, including device revenues, more than double of its closest competition.

The margin differential reflects Paytm’s higher share of merchant payments and its larger installed base of payment acceptance devices.

While other platforms processed over four times Paytm’s transaction value, a significant portion of that volume came from peer-to-peer payments, which carry limited monetisation potential.

The revenue impact is visible. Despite lower total payment volumes, Paytm generated around 20 per cent higher revenue in the first half (H1) of FY26 than competitors, supported by stronger merchant monetisation and cross-sell of lending products across its ecosystem.

Device deployment has emerged as a critical lever. Payment devices such as POS terminals and Soundboxes generated recurring rental income typically ranging between ₹80 and ₹300 per month, creating subscription-like revenue streams independent of transaction volatility.

Paytm’s device footprint has expanded at over 40 per cent CAGR (faster than industry’s 20% growth) over the past three years, strengthening its recurring revenue base and supporting blended margins.

Bernstein notes that as the industry matures, competitive advantage will increasingly hinge on monetisation depth rather than transaction scale.

With merchant payments forming the bulk of the profit pool and higher-margin categories such as credit-linked payments and bill payments gaining traction, platforms with stronger merchant engagement are better positioned to capture the expanding revenue opportunity.

The sector’s transition, the primer suggests, marks a shift from headline transaction market share to revenue efficiency and within that shift, Paytm’s merchant-heavy mix positions it ahead on monetisation metrics.