Paytm Relaunches BNPL as Credit Line on UPI to Boost Digital Lending

The fintech giant has revived its buy-now-pay-later (BNPL) product, Paytm Postpaid, as a credit line on UPI more than a year after it was put on hold. Paytm Postpaid, which was introduced in collaboration with Suryodaya Small Finance Bank, would allow consumers to obtain immediate short-term credit through the “Spend Now, Pay Next Month” plan.

Customers who are more likely to use this credit are the only ones being offered the service; a wider rollout is anticipated in the upcoming months. The facility provides short-term credit for a maximum of 30 days.

Why Paytm Closed the BNPL Credit Line?

In May 2024, Paytm discontinued its Postpaid service, pointing to a general deterioration in asset quality in the sector. Before being placed on indefinite hold in December 2023, Postpaid was first introduced as a BNPL product. It was then recast as a small-ticket personal loan option.

The business stated at the time that it would not start up again until the credit cycle was over. Since then, the company’s management has insisted that BNPL is still a worthwhile product and will reappear when the macroeconomy improves and lenders feel more at ease giving out small-ticket loans. Paytm CEO Vijay Shekhar Sharma hinted on the company’s Q1 results call that BNPL was halted because lenders were growing wary of small-ticket loans (less than INR 50,000).

He went on to say that BNPL will return when the personal credit is restored because he personally adored the product and was a promoter of it. The company is adamant that it will return. In contrast to the consistent development of its payments business, he reaffirmed that BNPL was one of Paytm’s most potent non-linear growth drivers, able to propel disproportionate revenue and margin expansion.

Improved Market Conditions Rightly Poised to Re-launch BNPL

The product’s rebranding as a credit line on the UPI offering implies that the business believes the market attitude has improved. Additionally, Paytm has been profitable at this moment. In the first quarter of FY26, the fintech giant reported a net profit of INR 122.5 Cr, compared to a loss of INR 840.1 Cr in the same period last year.

During the reviewed quarter, operating sales soared 28% year over year to INR 1,918 Cr. Notably, prominent UPI players are increasingly using the credit line on UPI offerings.

Such an option was introduced by PhonePe in August 2024, while Flipkart’s super.money strengthened its credit-on-UPI play by acquiring BNPL startup BharatX.