Do you agree that most of us were fascinated by some SUPER hero during our childhood?

Do you land up admiring them?

I am sure, the majority of answers are YES!

You must be wondering, are we going to discuss any SUPER hero business model here?


Instead, I'm going to take a deep dive into a SUPER App that caters to today's generation's demand of having everything under one umbrella.

A payment bank, merchant’s transaction partner, financial services provider, commerce and cloud service provider, and whatnot!

Yes, we are talking about, a giant startup, which is none other than, Paytm!

In this blog, we will have a look at Paytm's business model and also understand what makes them one of the top startups in India.

So, Let’s dive in!

Growth Story of Paytm

With more than 1 million users, Paytm is India's largest mobile payments and eCommerce platform. It was founded by Vijay Shekhar Sharma in 2010 in Noida, where it is headquartered. Its initial investment was $2 million.

Paytm is one of the top fintech startups in India. They've also joined the unicorn club, becoming one of the top unicorn startups in India.

In just a few years, they've become a household name in India, offering payment solutions for millions of Indians.

Among the largest online commerce platforms, e-wallets, and mobile payment service providers in India, Paytm offers a wide range of services.

It started out as a mobile recharge and bill payment platform but has now expanded to include other options such as peer-to-peer payments, utility bill payments, financial services, commerce, and cloud services. Paytm is a subsidiary of One97 Communications Limited.

Paytm has over 350 million users and is one of the most popular digital payment platforms in India. The company makes money by charging a small fee for each transaction.

Here are a few reasons why Paytm is one of the top fintech startups in India:

  • Inclusive approach
  • Affordable services
  • Convenient payment options
  • Strong customer support
  • Innovative products

Paytm, India's leading digital payments platform has seen tremendous growth in the past few years. Paytm is on a mission to simplify commerce in India. The idea behind Paytm was to make it easier for people to transfer money and make payments.

Today Paytm is not just the preferred payment platform for millions of customers but is also powering many other initiatives in India toward creating a cashless society.

Founded in 2010, Paytm started off as a mobile recharge and utility bill payment platform. It soon expanded into other areas such as travel bookings, movie tickets, and food delivery.

In 2014, Paytm launched its digital wallet.

In 2016, Paytm launched its payments bank and soon after, its e-commerce platform. Today Paytm has over 350 million users and is one of the most popular apps in India.

In 2017, Paytm app downloads surpassed 10 crores.

In 2018, it enabled merchants to receive Paytm, card payments, and UPI into their preferred bank accounts without any charges. Also, it partnered with Marquee lenders to offer postpaid, business, and personal loans.

In 2019, the FinTech company launched Paytm First, a membership program. In the same year, it rolled out a credit card.

In 2021, launched its IPO, and secured about $2.4 billion.

In the past year, Paytm has made several major announcements, such as its partnership with Google and its entry into the lending space.

Paytm is quickly becoming a one-stop shop for all of your financial needs, and is poised for even more growth in the years to come.

Since the inception of Paytm, the company has been on a steady growth curve that has seen its user base grow from 12 million in October 2015 to 200 million in February 2017, a growth of 1600% in the last two years.

Rags to Riches Story of Vijay Shekhar Sharma, Founder of Paytm
Success stories of people are often made of impossible dreams. You read, see, or hear about them but don’t know how interesting and challenging their path is to achieve. So, let’s read one such inspiring story of Vijay Shekhar Sharma, founder of Paytm. Paytm is one of the top startups in India [/b…

Paytm Business Overview: What Paytm Does?

Would it be better to do Paytm?

I use Paytm, do you accept it?

These are quite common phrases that we use in our routine life.

Paytm is into a lot more than just transferring money. With Paytm, consumers and merchants can make and receive online payments.

Paytm Recap says the fintech firm helps users avoid 1.6 bn trips to ATMs, Delhi-NCR is the digital payments capital of India

As per Paytm Recap, street vendors in Noida and Nagpur spent the most via Paytm.

In Q1 2023, Paytm generated 1680 crore business, out of which

  • 30% from payments from consumers
  • 35 % from financial services
  • 35% from merchants

Paytm offers a variety of services, including

  • Financial Services
  • Payment Services
  • Lending Business
  • Equity & Broking Services
  • Distribution of Cards
  • E-commerce Services

Paytm’s services, are divided into two categories:

  • Paytm for Customers
  • Paytm for Business

So, let's understand each in detail and what services they provide to both customers and merchants.

Paytm for Customers

Paytm offers a plethora of payment, commerce, and financial services. Users can choose from a variety of services that meet their specific needs.

  • Payment Services - Allows you to make money transfers, recharge, online payments, in-store payments, and bill payments. Commissions are charged by Paytm from different service providers.
  • Financial Services - Paytm Bank is no less than any other bank and provides customers with a secure saving account with real-time transaction updates. Additionally, Paytm offers credit cards, insurance, savings accounts, wealth management, and mobile banking.
  • Commerce - Customers have ease in booking all sorts of tickets like trains, flights, movies, and buses. Purchasing a ticket from Paytm is cheaper than many other platforms.
  • Paytm Wallet - Paytm wallet is a wallet created digitally, from which you can use your stored money on different sites.
  • Digital Gold - You can buy digital or paper gold and save it in secured vaults of Paytm. It is one of the secured investment options.
  • Postpaid - Users can spend the credit on online shopping through Paytm.

Paytm for Business

From a Banana seller to a multiplex, Paytm has become an integral part of every merchant’s life. Various services for merchants are as below:

  • Consumer Payments - Small businesses and merchants can receive payment online and in-store. Paytm has also brought Paytm Soundbox which offers merchants instant audio confirmation in any of the 11 supported languages for every payment made through a Paytm QR code.
  • Business Payments & Software - Services These include payouts, nodal accounts, POS Billing software, Advertising, and Business Khata.  That provides ease of business to merchants. Merchants no more have to get into the technical nuances of these processes.
  • Financial Services - For business owners, Paytm offers current accounts, loans, insurance, salary accounts, mutual funds, digital gold, nodal account, pensions for senior citizens, and other services.  With creative advertisements like #Paytm Karo, they show their market share and hold on merchant's segment.
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  • Developer Services - Paytm has its fraud management system, PAI. When a customer buys a product from the website, the software is required which facilitates exchange between the website and the bank. This software is API services and PAI.
  • Business Ads - Paytm digital advertising offers innovative and connecting ads which attract customers.
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Paytm Business Model: How Does Paytm Work

Paytm is the largest digital payments platform that allows users to make online payments using their Paytm wallet. Users can also add money to their Paytm wallet using their credit or debit card.

Paytm also offers a range of other services and has merged its mobile wallet and e-commerce businesses into a single platform, which is the first of its kind in the Indian market.

In order to use these services, users need to have a registered account with Paytm.

It allows its users to pay through its mobile app and also offers a feature where users can shop on its website and pay through the app. It has a feature called Paytm Mall where users can shop from various online brands.

As of June 30, 2021, Paytm offers over 337 million registered consumers and 21.8 million registered merchants payment services, commerce, cloud services, and financial services.

In order to better understand Paytm's business model and how it generates revenue and provides its clients with the best possible online services, let's look at the various components of the business model canvas.

Paytm Business Model Canvas
Paytm Business Model Canvas
  1. Key partners of Paytm

Certainly! Many organizations have partnered with Paytm, including banks, insurance companies, hotels, hospitals, distributors, and shopping centers, enabling the company to cater to the varied needs of its customers.

Commissions on each invoice earn revenue for Paytm. It has collaborated with the companies like Visa, HDFC Bank, Shopify, and Zoho. They act as a bridge between merchants and customers. For this, they have a Paytm Partner Program.

2.  Key activities of Paytm

Security and safety of funds and credentials are the major concern when we talk about transactions of funds. Paytm has emerged as a trusted platform on which people can rely and are using it as a wallet.

Paytm takes care of protection from scams, and fraudulent transactions, and keeps credentials safe. With this security and trustworthiness, it has targeted to become a one-stop solution for all kinds of payments like gas bills, electricity bills, recharge, postpaid bills, etc.

3.  Value Propositions of Paytm

Paytm has diverse and interesting value-making strategies. They started with a prepaid recharging business, and then they move to postpaid recharge.

Through this, they have withstood the test of time and have drawn customers to their platform on a regular basis while enticing them with cashback and coupons.

Then they introduced Digital Gold, wherein customers can store online gold. It came up as a solution for storing physical gold as well as storage of paper gold or gold bonds.

Later customers can sell the gold for transacting as well as exchange it for physical gold.

Paytm Mall was introduced where people can shop and use the Paytm wallet. By encouraging multiple transactions, the company has earned revenue from every transaction.

4.  Key Resources of Paytm

The major key resources of Paytm are Partners, technology platform, and RBI license. RBI license is very crucial and allowed it to bypass substantial levels of regulations and acts as a barrier to entry for other competitors looking to imitate it.

For both physical and virtual debit cards, Paytm Payments Bank has partnered with Mastercard.

5.  Customer Relationships

Paytm has a 24* 7 customer care center to connect with its users. At the same time, most of the Paytm services are self-serve in nature and are accessible through their platforms directly.

6.  Customer Segments

In a country like India, where online transactions and the digital world seem to be impossible for most of the population. Paytm has brought a revolution in digital space. Online transactions, payments, recharge, bill payment, and ticket booking have become part of monthly transactions.

7.  Channels

Apart from the website and mobile app, Paytm has partnered with various vendors, mobile providers, and many sponsors. They invest in cricket, and TV advertising.

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Paytm Revenue Model: How Does Paytm Earn Money?

Paytm has incorporated many revenue-generating strategies to make it a profitable organization. It charges fees from merchants, customers, and partners and provides them with services and business.

The revenue model of Paytm is categorized into the following.

  1. Marketplace (Paytm Mall)
  2. Recharge Services
  3. Bill Payments
  4. Paytm Wallet
  5. Digital Gold
  6. Paytm Bank
  7. Cross-selling
  8. Interest Arbitrage
Paytm Revenue Model- Paytm Business Model

However, all revenues come from merchant discount rates (MDR), convenience fees, commissions, and other sources. Take a look at each of these strategies separately.

  1. Merchant Discount Rate (MDR)

Merchants and vendors must pay a percentage fee for using the Paytm platform’s debit or credit card services. It is generally between 1-2 %. For an annual UPI subscription, it charges Rs. 5 to 65.

2.  Convenience Fees

Customers need to pay a fee for any transaction which is executed from the Paytm platform. Recharging, bill payments, and bookings all attract convenience fees.

3.  Commission

Paytm has multiple partners which include banks, insurance companies, hotels, hospitals, distributors, and shopping centers. They deliver products and services to end users and Paytm charges commissions from the partners for any loan sourcing, insurance policy pickup, credit card distribution, etc.

Earning commissions from Telecos is the primary revenue source of Paytm, and it ranges from 2% (for large & Established operators) and 5% (for new & small operators).

Furthermore, Paytm engages in quite a bit of advertising and promotion. Their creative marketing strategies include sponsoring different events and advertising cricket matches to boost brand awareness.

In September 2019, their association with BCCI was inked, and it will go on till March 2023. A winning bid of INR 326.80 crore was made for the home season.

Also, Paytm asks the BCCI to grant Mastercard home title sponsorship rights

Image Courtesy- Inside Sports

It uses social media channels like Facebook and Twitter for advertising. And it promotes brand awareness via traditional channels like TV and newspaper.

Paytm released an influential short ad film, “Paytm Karo” which then became a memorable brand tagline.

Also, Paytm’s campus ambassador program promotes educational content about its products and offerings and has injected human connection into its brand promotion effort.

Through the promotional activities on Paytm First Games app, it utilizes “invites” to onboard more users, and has over 25 million users. Paytm First Games had an annual revenue of  INR 100 cr - 500 cr for the financial year ending on 31 March 2022.

Image Courtesy- Times Of India

A branded festival is launched by Paytm, Cashback Dhamaka. They have rewarded the customers for transferring money. With this strategy, they have boosted the number of transactions that happens from their platform, manifold times.

Paytm Funding and Valuation

In Q3 FY 2023, revenue has grown by 257% YoY to ₹446 Cr and which accounts for 22% of total revenues, up from 9% in Q3 FY 2022.

According to Vijay Shekhar Sharma, they are now focusing more on lending, and also he has done tie-ups with banks for recovering loans as well.

The revenue growth was primarily driven by 357% YoY growth in the value of loans disbursed.

Paytm achieves operating profitability three quarters ahead of guidance; Reports EBITDA before ESOP of ₹31 Cr in Q3 FY 2023.

Paytm Financials & Valuation- Paytm Business Model

Paytm has raised a total funding of $4.64B over 17 rounds. Their latest funding round was a Series H round on Nov 03, 2021, for $1.1B.

It has the highest UPI beneficiary bank market share of about 22%.

In 2021, Paytm had an initial public offering (IPO) that attracted $1.1 billion in investor funds. Some investor partners in this anchor round were Canada Pension Plan (CPP) Investment Board, Blackrock, and Birla MF.

Paytm’s MTU (monthly transacting users), loan disbursal, and devices deployed continue to surprise us positively, as now the brand focuses on its primary business parameters.

In December 2022, in an upbeat operating performance update, Paytm recently said that they have disbursed 3.7 Mn loans worth INR 3,666 Cr. Paytm’s loan disbursal also increased 2.37X YoY to 10.5 Mn in Q3 FY23.

Now, customers can avail loan facility against their gold stored in Paytm digital lockers. They have sold over 100 kilograms of gold to around 1 lakh customers since the launch, and it’s growing two-fold every month, Hegde said.

One97 Communications Limited (OCL), the parent company of Paytm, launched ‘Paytm Payment Protect’, a group of insurance plans in collaboration with HDFC ERGO General Insurance to insure transactions made through UPI across all apps and wallets.

Paytm has announced Bijlee Days for all the users who pay their electricity bills

from the app. The digital payments service provider is offering 100 percent cash back and additional rewards to its users who will be making payments for electricity bills between the 10-15th of every month.

The usage of the Paytm Super App has also hit another high as the company said its average monthly transacting users is at 84 million for the two months ended Nov 2022.

Average Monthly Transacting Customers- Paytm Business Model

A total of 19 investments have been made by Paytm. Their most recent investment was on Jun 2, 2021, when Fable Fintech raised.

A few more investments — Rooter, HungerBox, Infinity Infoway, TapChief, and Paytm Payments Bank

Also, Paytm has had 4 exits. Paytm's most notable exits include CreditMate, Alibaba Group, Little, Abhibus, Ant Financials, and TapChief.

Paytm has acquired 12 organizations. Their most recent acquisition was CreditMate on Oct 4, 2021. Balance, NightStay, Cube26, TicketNew, Little, EduKart

More specifically, Paytm earns money as users download the app, use UPI to transfer money, pay online vendors, or make offline payments by scanning QR codes.

The company has also introduced an additional revenue layer called "Soundbox" for merchants, where a device confirms the payment received instantly. The installation of a soundbox offers a steady revenue line and ease to merchants.

Conclusion: The Way Ahead

In a country like India, Paytm has revolutionized online transactions and recharging. It is their strategies and innovative products that have inspired even the government to introduce an online transaction system.

They are trying very hard to increase their involvement and market share in UPI so that they can acquire more and more customers.

In Paytm’s super app, they have multiple facilities for customers to shop, make payments, recharge, bookings, loans, insurance, gold, etc.

Now, they are focusing more on primary operations like payments services, lending, and recharging. They have set the strategies for 2023 to increase their revenue:

  • Focus on what matters
  • Payment and lending services
  • Attention to fewer things

Paytm payment business is the most comprehensive and profitable business for Paytm. It works for Paytm as Paytm invested in the scope of work that Paytm handles.

Paytm has strong technology and as they have 7 crores customers and 2.7 crores merchants, that's why they have too much data.

There is a lot to learn from the Paytm business model to grow your business. 3 of them are:

  • Build a user-centric product.
  • Focus on making your customers your marketers.
  • Try to build your startup with existing solutions.

According to Vijay Shekhar Sharma, they have great plans for growth and profitability. But they have no plans to go out of India, he wants to take this as an opportunity and will focus on our country only.

He said, India is not +1, we are the ONE!

Frequently asked questions (FAQs)

1. Who is Paytm's Owner?

Vijay Shekhar Sharma (born 15 July 1978) is an Indian entrepreneur and billionaire. He is the Chairman, Managing Director, and CEO of One97 Communications (which includes its consumer brand Paytm) till December 18, 2027. Paytm was founded in 2010.

2. When Paytm started in India?

Paytm was founded in August 2010 by its founder Vijay Shekhar Sharma in Noida, Delhi NCR. The initial investment of Paytm was US$2 million.

3. How does Paytm make money?

As far as revenue generation and profitability are concerned, Paytm is perfect. Merchants, customers, and partners pay fees for services and products provided by Paytm. Paytm makes money through

  • Commissions
  • Convenience fees
  • Merchant discount rates
  • Advertising
  • Promotions
  • Cross-selling
  • Interest Arbitrage

4. Why Paytm is at loss?

There are many reasons that account for the running losses of India’s largest mobile payments platform, Paytm. Here is a list of reasons:

  • Operating cost is high, and Paytm does not use UPI to acquire customers.
  • Having difficulty persuading investors of its value
  • They provide huge cashback.
  • Advertising cost is high, they deal with BCCI, Mastercard, etc. by investing heavily in marketing.

However, the loss-making firm is confident that it will turn profitable by September 2023. The fintech major reported that its earnings have improved by 61% YoY.

A branded festival is launched by Paytm, Cashback Dhamaka. They have rewarded the customers for transferring money. With this strategy, they have boosted the number of transactions that happens from their platform, manifold times.