PayU India turns operationally profitable in Q2 after RBI license nod
The Naspers-owned fintech reported Q2 FY26 revenue of $214 million and positive adjusted EBITDA of $3 million. The India unit, the company’s largest market, grew revenue 20% to $397 million.
PayU India swung to a profit in the September quarter, marking a long-awaited break in the company’s margin grind as its payments and credit units hit what the firm called “an inflection point in profitability.”
The Napers-owned fintech reported Q2 FY26 revenue of $214 million and positive adjusted EBITDA of $3 million. The India unit, the company’s largest market, grew revenue 20% to $397 million.
Adjusted EBITDA refers to PayU’s operating profit after stripping out anything that isn’t part of its day-to-day business. In this context, PayU may have excluded non-cash items, acquisition-related costs from the Mindgate deal, and other one-off charges linked to tightening compliance for the RBI licence.
The turnaround followed a year of uncertainty and operational drag linked to PayU’s prolonged wait for a final payment-aggregator licence. India’s central bank has tightened scrutiny on payment companies, slowing approvals and forcing applicants to overhaul data-localisation systems, merchant-onboarding processes and risk controls.
PayU continued operating during the review but couldn’t scale parts of its business or onboard certain merchants until the approval finally came through in May 2025.
Payments revenue grew 20% to $301 million, driven by a pivot toward higher-margin software and value-added services such as fraud-risk tools and multi-factor authentication. Those offerings accounted for 34% of payments revenue, helping offset the surge in low-ticket UPI transactions that pushed overall payments volume up 55%.
Take rates held steady as PayU leaned into mid-market and SMB customers and tightened portfolio management.
PayU deepened its UPI infrastructure push by completing its acquisition of Mindgate Solutions, taking its effective ownership to 70% in March 2025. According to Prosus’ filings, the deal was structured through two tranche payments. The first tranche was $68 million for a 43.5% stake. A second tranche of $76 million, tied to Mindgate meeting financial performance milestones as of March 31, 2025, took PayU’s holding to 70%.
Mindgate today powers UPI systems at major banks, including SBI and HDFC Bank and processes roughly 10 billion monthly transactions.
Lending pivot lifts profitability
PayU’s credit business, which has been aggressively derisked over the past year, grew revenue 17% in the first half of FY26 to $96 million, driven by $640 million in loan issuances across consumer and small-merchant segments.
The shift toward embedded, partnership-led lending cut credit costs and sales spending, helping the business improve its adjusted EBITDA margin from -20% in 1H25 to -3% in 1H26 and reach breakeven in Q2 FY26. The company’s total merchant-lending AUM reached $204 million as of September 2025.
“We connected PayU much more with all our companies. So PayU is giving credits to our customers and give credits to our partners,” Prosus CEO Fabrício Bloisi said to reporters.