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How Paytm Makes Money

Paytm is a digital payment system and financial technology company. It is both B2C and B2B company. It extends services such as mobile recharge, utility bill payment, travel, movies, and event bookings, and furthermore in-store payment at grocery stores, fruits and vegetable shops, parking stalls, restaurants, pharmacies, and education institutions with Paytm QR code.

Very soon, One97 communications, the parent company of Paytm is going to raise a target capital of over $2.3 billion through an initial public offering which will value the company at $24-$25 billion dollar.

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Paytm Business Model

It is currently operating across six broad domains from where Paytm generates revenues –

1. Paytm Wallet

It is a secure digital wallet that lets you manage your money with just a touch, make recharges pay bills, send money to your friends and relatives, and pay for purchases across various brands, shops, or even general store services like Uber, Makemytrip, Bookmyshow and many more. It lets you safely store money at your convenience & comfort and save your credit card or debit card for fast and secure transactions.

Paytm invest such money in overnight liquid funds. The company does not give returns to its customers over these investments. It also charges commission from both merchant and customer.

paytm financial statements

2. Paytm Mall

Paytmmall is an online consumer shopping platform launched by Paytm. It offers a wide range of products from electronic devices, clothing materials, fashion products to furnishing, etc. It is trying to emerge as a competitor to Amazon, the reason being, it is backed by Alibaba, a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology, which holds almost 25% stock in Paytm owner company One97 communications so it is being as a proxy for Alibaba to enter in an Indian e-commerce scenario.


Paytm is the leading recharge platform in India for airtel, jio, Idea, Vodafone, BSNL, MTNL, etc. It gives great ease as all you have to do is to enter your mobile number and it will fetch your operator and your circle automatically. One can browse through the wide range of the latest recharge bundles and additionally save money with the help of scratchcards and get cashback offers. It charges a commission from a telecom company for such recharges.

4.Paytm Solution

Paytm offers scores of payment solutions for merchants who do not have any facility in terms of accepting payment via UPI. For using such services merchant has to give some commission to Paytm.

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5. Paytm Digital gold

One can buy, sell, gift, and get 24k gold delivered in a very transparent and convenient way. Paytm has partnered with MMTC-PAMP, which has the largest BIS authorized and internationally accredited gold refinery in the country to provide the finest quality of gold to its customers.

When a consumer buys gold on Paytm, MMTC-PAMP keeps an equal quantity of 24 karats 99.99% Pure Gold in 100% insured vaults at secured premises. One can access their locker balance on the Paytm App and sell, gift, or get delivery of their gold anytime, anywhere. To avail such services it charges commission from its customers.

6. Cross selling

Paytm has entered in Banking, financial services, and insurance industry. It cross-sells banking products, stockbroker products, and insurance products. It has also partnered with various banking, insurance companies to get a stronghold in this market. It charges a commission on banking services offered through this app.

Paytm has entered into a vast array of businesses. Though it is a loss-making company, it is incurring very high expenses in acquiring customers and business. Its revenue is not going up in fact it is going down.

Future Strategy

Paytm understands very much that its business model is complex and it is trying to simplify it. Paytm is trying to get a stronghold in every niche which is becoming a reason for not having any core competency.

1.It is cutting down its cost in the marketing & promotional, advertising segment but has increased its staff expense by recruiting more and more employees, the reason being the company is consistently making losses since its inception. It is going for IPO later this year so of course, it would like to rationalize its cost.

2. Paytm is moving its focus from B2C from B2B segment, from customer acquisition to business acquisition

so if you take into consideration the above two points, cutting down its cost and focusing on hiring more manpower who can go out and start acquiring more and more merchant to whom they are offering scores of conveniences. The fintech giant has made it very clear in its strategy that it is keen to acquire more business than customers.

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Key Challenges

Does paytm percieve whatsapp as a threat?

Paytm has decided not to pursue p2p money transfer which is what WhatsApp is doing. The company is more focusing on merchant payment. It has already cut down its expenses on P2P since the last two quarters as it is trying to streamline its business.

PayTm revenues

Is Paytm Trying To Compete With Amazon?

As we can see they are in fact trying to compete with amazon with Paytm mall directly or indirectly as they believe that they have enough money and a robust business model to do so. The company believes that they have built a legitimate market place and it has done very well for them.

Paytm has been very irresponsible in terms of burning money as it is trying to become jake of all trade. Though the e-commerce industry has been suffering losses of billions still Paytm is trying to make its place in it because giants of the e-commerce segment are aiming to become the one-stop-shop destinations of the household of India. They are indirectly persuading their customers to get hooked on the habit of ordering products from their online segment.

Once people get habituated they would start high selling products at the backend. For example, you might have observed something called amazon basics that is the homegrown brand of amazon. Once they start replacing the high-end product, their profit margin shoots up. This is actually a massive golden nest for the company for whoever wants to win this race but for the time being, this is a losing scenario for the Paytm company.

Graph data source Economics Times

Saquib Ahmed
Hi, I am a business student, currently learning about Finance and Digital Marketing. I have also a keen interest in technology too. I enjoy reading and presently I am reading "The Psychology of Money". With these blogs, I am trying to make a journal for myself so that later when I look back I can see how due to my small initiative, helped to shape people's life and how much I grew.


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