The deal will help Paytm to enhance customer experience on its platform, it said in a statement.
Paytm didn't disclose any financial details. However, The Times of India reported that the deal is worth $8 million (Rs 53 crore).
The 20-member team behind Delhi-based The Signals, which created Shifu, has joined Paytm across various verticals, the statement said.
The Shifu task-managing app mines the smartphone usage patterns of users and makes personalised and relevant recommendations to them. The app will continue to be available in its original form after the acquisition.
"By integrating their technology & behavioural modelling with Paytm app, we will be able to offer a highly intuitive and personalized experience to our users," said Kiran Vasireddy, senior vice president at Paytm.
He said the acquisition will boost Paytm's capabilities on artificial intelligence, which will bring the "next wave of disruption" in e-commerce. "By predicting user behavior based on past usage, location and other data points, our platform will be able to offer relevant recommendations to our users," he said.
The Signals was founded by Prashant Singh, Deepansh Jain and Michael Massey in 2012. Singh previously co-founded the Delhi chapter of Mobile Monday, which worked to bring together mobile enthusiasts, developers, technologists, business folks, entrepreneurs and VCs under a common forum. He has also worked with Spice Labs, Affle and Monsoon Multimedia in the past.
IIT-Kharagpur alumnus Massey and Delhi University graduate Jain co-founded app development company Juvenis Tech before launching The Signals.
In early December, Paytm had acquired Near.in, a marketplace app that connects users with local businesses for home services, its first acquisition after it raised an undisclosed amount in fresh funding from NYSE-listed Alibaba Group Holding Ltd and existing investor Ant Financial three months ago.
Paytm had previously raised funding from SAIF Partners, Intel Capital and Silicon Valley Bank (now InnoVen Capital). It also counts IDFC and Reliance Capital Ltd, besides individual investors such as Nikhil Vora, among its small shareholders.