How Pine Labs Shifted Gears: From PoS Devices To An AI-Powered Fintech Stack

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In 1998, the newly incorporated Pine Labs was helping petrol pumps accept payments and manage loyalty programmes. Nearly three decades later, Pine Labs is a listed company that has expanded well beyond payments into online checkout, consumer financing, gift cards, card issuing and banking infrastructure By Q1 FY27, the fintech was serving 11.5 Lakh+ merchants, alongside brands and financial institutions, across India, Southeast Asia and the Middle East. A string of acquisitions helped Pine Labs build out this expanding fintech stack. While Qwikcilver added gift cards, Fave brought consumer rewards, Mosambee strengthened merchant acceptance, and Qfix and Shopflo expanded online payments and checkout. Similarly, Setu added fintech infrastructure, while Credit+ and Saluto brought issuing and enterprise rewards capabilities. However, the breadth came at a cost. Despite raising nearly $1.6 Bn before making its public markets debut, Pine Labs struggled for years to turn expansion into consolidated profits. Payment hardware, employees, processing, cloud infrastructure and overseas operations all needed funding. The next logical step was to get listed. But Pine Labs’ path to the public markets was anything but straightforward. It first deferred a planned US IPO, reportedly targeting $500 Mn in 2022, amid a weak market. It eventually opted for an Indian listing, merging its Singapore holding company with its Indian entity in June 2025. The payoff came in FY26, when Pine Labs reported its first full-year consolidated profit of ₹112.5 Cr, compared with a loss of ₹145.5 Cr in FY25. Operating revenue grew 19% to ₹2,710.6 Cr, while adjusted EBITDA jumped 57% to ₹559 Cr. In its FY26 results, Pine Labs said indirect expenses, excluding ESOP costs, grew just 8% against 19% revenue growth. This operating leverage helped lift its adjusted EBITDA margin from around 16% to 21%, even as its contribution margin dipped from 76% to 75%. Lower depreciation and amortisation, higher other income and a smaller exceptional charge also supported its bottom line. The reconciliation shows other income, excluding provision write-backs, rising from ₹44 Cr to ₹84 Cr, while exceptional charges fell from ₹37 Cr to ₹8 Cr. Therefore, the profit improvement combined operating gains with benefits below the operating line. Profitable segments like the Qwikcilver gift card and prepaid platform also contributed substantially to high-margin income. But Q1 FY27 results show why Pine Labs’ turnaround story still warrants close scrutiny. Revenue rose 20% year on year (YoY) to ₹736.9 Cr and net profit more than quadrupled to ₹19.6 Cr, but adjusted EBITDA margin narrowed to 17.1% from 19.6%. The company attributed the pressure to business mix and additional investment. Decoding Pine Labs’ Revenue Engines Pine Labs still gets most of its revenue from its Digital Infrastructure and Transaction Platform (DITP), which comprises checkout infrastructure, affordability and value-added services, transaction processing and fintech infrastructure. DITP generated ₹1,837 Cr in FY26, up 15% YoY, accounting for about 68% of operating revenue. Meanwhile, Pine Labs is trying to increase revenue from its existing merchant network by selling more services — affordability/EMI, online payments, value-added services, etc. — rather than relying only on payment terminals. Mentioned in RHP as Issuing and Acquiring Platform, it contributed the remaining 32%, or ₹874 Cr in FY26. But the competitive landscape is already crowded. PhonePe has expanded beyond QR codes into soundboxes, card terminals and online payments. Paytm combines payment devices and processing with EMI and merchant lending, and ended FY26 with 1.5 Cr subscription merchants. In September 2026, PhonePe announced plans to deploy more than 50 Lakh additional payment devices and hire over 20,000 frontline sales staff over the following year, with a substantial rural focus. Online-first rivals are converging on the same opportunity. Razorpay commands payment acceptance, disbursals, lending and business banking, with an AI payments push extending its reach. Cashfree is building SME and cross-border offerings beyond its gateway. Pine Labs’ competitive proposition is the combination: merchants can connect multiple acquiring banks, billing software and affordability offers through one platform. That integration gives them a reason to use more of its services, although its RHP cautioned that switching costs may not prevent them from moving transactions to rivals. Earning More Beyond The Payment Device As an offline merchant, Pine Labs’ business revolves around the digital checkout point (DCP), which connects cards, UPI, wallets and loyalty points with banks, payment networks and billing software, while handling acceptance and reconciliation. Its RHP listed DCP subscriptions, hardware sales, installation and removal, automation services and maintenance as sources of in-store revenue. Average monthly revenue per DCP was ₹380.08 in FY25. The network reached 20.3 Lakh DCPs in FY26 and 21.7 Lakh in Q1 FY27. Subscription income, however, does not rise simply because a checkout gets busier. Pine Labs needs either more paying deployments or higher revenue per deployment. Transaction-linked affordability, value-added services and processing fees let it earn more from activity at those counters. Alongside this, Pine Labs is shifting more of the upfront device cost to merchants. Rau explained that getting merchants to buy terminals reduced its depreciation burden, although the device sales themselves earned lower margins. Across the business, company-wide contribution grew 11% to INR 533 Cr in Q1 FY27, slower than revenue’s 20% growth. The shift in business mix and higher connectivity, distribution and operational costs weighed on margins. Online payments take the model a step further. Payment gateways, links and recurring collections generate transaction-value-linked fees without another device at the counter. The Plural launch in 2021 and Qfix acquisition in 2022 helped build this business. Online payment revenue grew 56% in FY26, outpacing the group’s 19%, however its scale remains harder to judge, as the results did not disclose a separate revenue figure. Selling More Through The Same Checkout Beyond accepting payments, Pine Labs helps its customers sell. As Rau put it on the July 2026 call, “we help brands, banks, financial institutions, acquire new customers, convert those customers, engage with those customers.” EMI is a key part of this proposition. For financed purchases, Pine Labs earns technology fees from merchants, brands and financial institutions, largely linked to transaction value. The lender provides the credit and takes on the repayment risk. Affordability revenue grew close to 20% YoY in Q1 FY27, Rau said, despite electronics and mobile-phone price increases and supply disruptions. The share of DCPs generating Flow and affordability volumes reached 30%, up from 24% a year earlier, showing greater use of services across the existing network. Demand shifts with the incentives banks and brands fund. On the Q4 FY26 earnings call, Rau described a large bank reducing offers on a leading smartphone brand as customers became willing to buy with fewer incentives. Banks were also backing newer categories, including electric vehicles. “Our job is to come up with newer sectors, come up with newer touch points,” Rau said. Non-electronics affordability volumes grew over 60% in FY26. Sustaining that expansion means finding purchases customers want to finance and banks and brands will support. Moving Deeper Into Banking Infrastructure Pine Labs’ relationship with financial institutions goes beyond merchant payments. Banks and fintechs also need infrastructure within their own applications. Pine Labs supplies APIs for customer verification, financial-data access, digital agreements and collections, allowing institutions to avoid building every connection themselves. Its acquisition of Setu in 2022, reportedly for $70 Mn to $75 Mn, expanded its capabilities across payments, onboarding, digital signatures and financial-data analysis. Pine Labs now wants to move further up the value chain by helping lenders make sense of the financial data flowing through these systems. “The future of payments is not going to be only in terms of money movement, but also in terms of data movement,” Rau said on the July 2026 (Q1 FY27 earnings) call. Six banks and NBFCs signed up for SignalIQ, which analyses financial data to support lending decisions. This creates another potential source of value beyond payments and data collection. Pine Labs has not separately disclosed SignalIQ revenue or FinTech Infrastructure’s FY26 revenue contribution in the cited results. Cards And Rewards Shift The Revenue Mix While banking infrastructure deepens Pine Labs’ relationships with lenders, cards and rewards are changing the company’s revenue mix. The Issuing and Acquiring Platform’s revenue grew 30% YoY, from ₹671 Cr to ₹874 Cr in FY26, compared with 15% growth for DITP. As a result, DITP’s share of group revenue fell from 72.1% in FY24 to 70.5% in FY25 and about 68% in FY26. Issuing and acquiring, meanwhile, increased its share from roughly 28% in FY24 to 32% in FY26. The segment has two key pillars: Pine Labs Prepaid, which handles gift cards and rewards, and Credit+, which provides card-issuing and payment-processing technology to banks and fintechs. For a retailer, Pine Labs Prepaid activates gift cards, maintains balances and processes redemptions. It also distributes cards to consumers and corporate buyers, including through Woohoo, for uses ranging from employee rewards to customer promotions and dealer incentives. Pine Labs earns from both distribution and processing. Credit+ embeds Pine Labs in a different part of the customer’s operations. It supplies systems for banks to manage credit, debit and forex card accounts and process transactions, as well as infrastructure for institutions supporting merchants that accept cards. The Next Test Is Making Expansion Pay Pine Labs has built multiple ways to monetise its merchant and financial-institution relationships. The next challenge is making that larger platform more efficient. AI is central to that effort, although the spending comes before the gains. In FY26, Pine Labs invested around ₹24 Cr in AI-related initiatives: ₹20 Cr in capabilities, infrastructure and customer-facing automation, and ₹4 Cr in enterprise AI technologies and tools. The company says automation cut software testing cycles by more than 95% and improved developer productivity by 25%. It has not quantified the resulting impact on profits. Servicing the existing network offers a more immediate opportunity. “Today, almost 50% of our terminals are self-healing,” CFO Sameer Kamath said on the Q1 FY27 call. Automated diagnostics and recovery could reduce field-service visits and lower the cost of keeping merchants’ payment systems running. Pine Labs is also experimenting with payments initiated by AI assistants. Its Q1 presentation said P3P, its agentic payments system, was live with Vijay Sales and Gullak, allowing payments within user-set rules. The company has not disclosed P3P revenue separately. Competition is already emerging around AI-enabled payments. Razorpay and NPCI unveiled a Claude-based payments pilot in February 2026, while PhonePe launched an AI integration tool in May to help merchants connect to its gateway. These serve different functions, but raise the same commercial question: will the tools win transactions or lower costs? Expansion also needs people. Rau said Pine Labs added about 500 salespeople over six months, with full productivity typically taking 6 to 12 months. Those hires add costs before new merchant relationships deliver their full revenue potential. That spending weighed on Q1 FY27. Data, cloud and technology costs rose 33% to ₹64 Cr, while adjusted EBITDA grew just 5% to ₹126 Cr, against 20% revenue growth. Management reiterated FY27 revenue growth guidance of 21-23.5% and said it expects contribution margins to improve in the second half as processing and transaction-linked services increased. From petrol pumps to banking systems, Pine Labs has built more ways to earn from a payment. Its first profitable year shows that breadth can support earnings. The next test is whether deeper customer relationships and lower servicing costs can sustain them as competition and expansion spending intensify.