Bengaluru, July 15, 2025 – PayU India, a leading fintech platform owned by Dutch technology investor Prosus, has raised INR 302 crore (approximately $35 million) in fresh capital to strengthen its burgeoning credit business. The funding, secured through the issuance of 4.9 crore equity shares to Prosus’ subsidiary MIH Payments Holdings B.V., marks a strategic move to fuel the company’s growth in India’s rapidly expanding digital lending market. This infusion follows a significant INR 1,013 crore investment by Prosus earlier in 2024, underscoring India’s pivotal role in the global fintech giant’s strategy.

Bolstering the Credit Vertical

PayU India’s credit arm, PayU Finance, has emerged as a key growth driver for the company, disbursing INR 9,130 crore ($1.1 billion) in loans during FY25, a 63% increase year-on-year. The latest capital infusion aims to accelerate this momentum, with a focus on expanding lending services, particularly for small and medium businesses (SMBs), which accounted for 23% of the loan disbursements in FY25. “This fundraise is to fuel the growth of our credit business, which is expected to breakeven by September,” a PayU India spokesperson confirmed, highlighting Prosus’ confidence in the company’s path to profitability.

The credit business, while promising, has faced challenges, including higher-than-expected losses in its consumer loan portfolio, contributing to a negative adjusted EBIT (aEBIT) margin of 19% in FY25. Despite these hurdles, PayU India is tightening its underwriting processes and leveraging AI-driven analytics to mitigate risks and enhance loan performance, positioning itself for sustainable growth.

Payments Business Gains Momentum

PayU India’s payments division achieved a significant milestone by breaking even in the second half of FY25, driven by a 12% revenue growth to $498 million (INR 4,135 crore). This success stems from deeper penetration among existing merchants and the expansion of value-added services, despite intense competition and a higher share of low-margin UPI transactions. The company added 13,000 new merchants in FY25, bolstered by regulatory approvals from the Reserve Bank of India (RBI) and strategic acquisitions like Mindgate Solutions.

To sustain this growth, PayU India has restructured its operations, creating dedicated teams for key account management, customer acquisition, and partnerships. “Our focus is on deepening our merchant ecosystem and introducing innovative financial services,” said Anirban Mukherjee, CEO of PayU India. This strategic reorganization aligns with Prosus’ broader vision to build an AI-enabled payments and lending platform in high-growth markets like India.

Navigating a Competitive Landscape

India’s fintech sector is fiercely competitive, with players like Paytm, PhonePe, and Razorpay vying for market share in digital payments and lending. PayU India’s ability to break even in its payments business amidst this rivalry reflects its robust merchant relationships and operational efficiency. However, the credit vertical’s operational losses, which widened to $32 million in FY25 from $20 million in FY24, highlight the challenges of scaling in a regulatory-intensive environment.

The company’s decision to delay its initial public offering (IPO) to 2026 reflects a strategic pivot toward improving profitability. “Our focus is on enhancing business operations over the next six to twelve months,” said Prosus CFO Nico Marais. This move allows PayU India to address credit portfolio losses and refine its business model before entering the public markets, ensuring a stronger financial foundation.

India’s Central Role in Prosus’ Global Strategy

Prosus, which has invested over $8.6 billion across more than 30 ventures in India, views the country as a cornerstone of its global fintech and ecommerce ecosystem. PayU India’s FY25 performance, with consolidated revenues of $669 million (a 24% increase), underscores its importance. The company’s growth is supported by India’s digital payments boom, with UPI processing over 18 billion transactions monthly, as noted by the IMF. PayU India’s integration into this ecosystem positions it to capture the ongoing shift toward digital financial services.

The government’s supportive policies, including tax incentives for startups and digital infrastructure investments, have further bolstered India’s fintech landscape. PayU India is leveraging these tailwinds to expand its offerings, from lending to value-added services like merchant analytics and embedded finance solutions, catering to India’s growing SMB sector.

Challenges and Opportunities Ahead

While PayU India’s payments business has achieved breakeven, the credit vertical’s losses remain a concern. The company reported a consolidated aEBIT loss of $44 million in FY25, up from $32 million in FY24, driven by higher financial leverage and credit costs. To address this, PayU is enhancing its risk assessment models and exploring partnerships to diversify its lending portfolio.

The company’s acquisition of Mindgate Solutions, a leading payment gateway provider, is expected to strengthen its technological capabilities and merchant network. Additionally, PayU India is investing in AI and machine learning to improve credit scoring and fraud detection, critical for scaling its lending operations sustainably.

A Path to Profitability

PayU India’s focus on breaking even in its credit business by September 2025 is a critical milestone. The company’s ability to achieve this will depend on its success in optimizing loan underwriting and expanding its SMB lending segment, which has shown strong demand. Prosus’ continued financial backing provides PayU India with the resources to navigate these challenges while capitalizing on India’s digital lending market, projected to grow at a 25% CAGR through 2030.

As PayU India prepares for its eventual IPO, its strategic investments in technology, partnerships, and market expansion will be key to establishing itself as a leader in India’s fintech ecosystem. “India is at the heart of our global strategy,” said Prosus CEO Fabricio Bloisi. “PayU’s growth reflects the immense potential of digital payments and lending in this market.”

Looking Forward

With INR 302 crore in fresh capital, PayU India is well-positioned to accelerate its credit business while consolidating its leadership in digital payments. The company’s focus on profitability, technological innovation, and merchant ecosystem expansion sets the stage for a transformative year ahead. As India continues to lead the world in fast payments, PayU India’s role in driving financial inclusion and digital transformation is more critical than ever.