What is the first thing that comes to your mind whenever you hear the term “Paytm”? Payment through Mobile! Yes, it is the same as it sounds. In India, “Paytm” has reached the peak of popularity and got almost synonymous with “Online Transactions.” Apart from being the largest payment app in this land, it is flourishing as a commerce and e-wallet enterprise too. Launched in 2010, it became very successful within a decade. Undoubtedly, the secret lies in its successful and effective business model. So, in this article, we are going to decode the “Business Model of Paytm.” Stay tuned!
Working strategy (Business Model of Paytm)
The annual report of Paytm for the financial year 2021-22 showed that the business model of Paytm has been successful in bringing the QR and mobile payment revolution. All of this has been possible due to the brilliant working strategies of this app.
Key Activities (Business Model of Paytm)
The crucial activity of Paytm is facilitating fund transfers from one place to another with top-notch security. It provides a broad range of payment instruments with which customers can make online payments on third-party apps. It is an all-rounder payment app allowing the following types of transactions-
- Paytm payment instruments– Paytm wallet, Paytm Post-paid BNPL (Buy Now Pay Later), Paytm gift cards.
- Net banking– With Paytm net banking, you can perform a wide range of banking tasks like creating fixed deposits, transferring fat money, recurring deposits, etc.
- Payment through cards– You can transfer money online using a debit card on Paytm via wallet.
- BHIM UPI– It enables fast, secure, and reliable cashless payments through mobile phones if your bank account is linked to your mobile number. You do not need to pay any extra fee while making transactions through Paytm BHIM UPI.
With the help of the above services, you can easily recharge your mobile, pay utility bills, rent, tolls, and education, and top-up your wallet. Also, with UPI you can transfer money directly from your bank account to the receiver. However, this is not the end. Paytm is continuously working to enhance its interface. So that these new changes can attract new users for money transfers on digital platforms.
Key Partners
Paytm mainly partners with banks to improve the payment gateways into the banking systems. Other than that, it also collaborates with a swarm of organizations that collect bills, data, and payments from its customers for its services. The partner organizations are insurance companies, hotels, hospitals, pharmaceutical companies, shopping centers, etc. One of the key partners is Mastercard which helps the customers of Paytm to transact securely through cards.
Value Propositions
The prepositions confer great value to this digital payment platform. Even though it began its journey as a pre-paid recharging business, its value propositions increased effectively. It includes an advanced Paytm Wallet, vertical e-commerce, and digital gold (virtual gold).
Key resources
One of the most significant critical resources of Paytm is the license of RBI (Reserve Bank of India). Other than that, the software, designs, and partners serve as important resources of Paytm due to which it can provide the services at extremely pocket-friendly prices.
Customer relationships
Do you know that Paytm handles over 65 million? It is not an easy task! But still, it provides customer care service 24*7 to solve the problems of the clients as well as their customers.
Paytm Ads
This is another key strategy to acquire customers as well as famous brands. Paytm ads were launched to provide an advertising platform so that the brands can acquire their target audience. Being a transactional platform, it has a large user base from youth transacting on cabs and fast foods to families purchasing groceries and kid’s wear. It creates the right segmentation for the brand campaigns with the help of 3 main parameters i.e., Geographic, Demographic, and Transactional. It knows the right audience for the respective clients (brands). Paytm collects data from the actual digital transactions of users. Thus, this data helps their team to map the behavioral patterns and lifestyle choices of the customers.
Marketing strategy (Business Model of Paytm)
Paytm has a huge marketing budget to facilitate smooth marketing functions. An effective marketing strategy is a powerful tool to enhance a business’s overall performance. Those strategies aid in the conversion of the audience into customers. Some of the impactful marketing strategies of Paytm are-
- Cashless transactions schemes– Paytm began this strategy in 2016. The innovative initiative behind this plan was “each one, teach one.” Here, it announced a scholarship of INR 2100.00 to INR 10,000.00 to the users who will participate in increasing digital inclusion as well as the adaptation of Paytm. Another scheme known as “Scan any QR to pay using Paytm” was launched in seven different languages of India namely Bengali, Gujarati, Tamil, Marathi, Telugu, Kannada, and Malayalam.
- Sponsorship events– In the beginning, phase, Paytm actively participated in sponsoring a broad range of events and tournaments to increase brand awareness among the public.
- Promotions & advertisements– Advertisement campaigns of Paytm have produced significant impressions on the audience highlighting the ease of digital transactions of money. Some of the famous ads of Paytm were the “Dil ke account se Paytm karo” campaign of valentine’s day; the “Giving it back, by paying it back” campaign to aspire to women’s financial autonomy, etc.
- Social media marketing campaigns – The target audience of Paytm is everyone who uses a smartphone. So, the target audience includes students, businesses, merchants, stores, employees, etc. Hence, it boastfully utilizes visual advertisements on social media platforms like Facebook, Twitter, Instagram, YouTube, etc. Some of the popular social media marketing campaigns of Paytm were Paytm Karo, Facebook live training (Paytm Merchant Connect- Training Series), The soldier mobile game, etc.
Revenue sources (Business Model of Paytm)
The prime sources of revenue for Paytm are commissions and escrow accounts. It earns money from the following services-
- Paytm Wallet– It is the most impactful service of Paytm that forms a bridge between banks, retailers, and customers. Paytm wallet is a semi-closed digital wallet that enables you to pay utility bills, book tickets, and recharge your mobile phone. Apart from the earnings, this wallet is authorized by RBI. Thus, it is a legitimate payment gateway for customers. Now, coming to the point i.e., how Paytm earns money from its wallet? Whenever you store money in a Paytm wallet, the fintech firm stores the money in a bank from which it earns interest. Hence, Paytm counts that earned interest as revenue.
- UPI Incentives– As you have seen in the “PhonePe business model,” the Union Government of India has provided INR 26 billion to digital payment apps like Paytm and PhonePe to promote RuPay Cards and low-value BHIM UPI transactions for P2M transactions. Thus, these incentives act as an indirect form of revenue for Paytm.
- Recharge business– Do you know Paytm was launched in 2010 to provide mobile recharging services? It was quite simple to earn revenue back then. Gradually, the service standards of Paytm increased by providing comfortable recharging services to customers by associating with various Telecom companies like Airtel, VI, Jio, etc. As of now, Paytm earns a commission of 2-3% per recharge from respective telecom companies. Quite interesting! This commission acts as one of the most profitable revenue sources for Paytm.
- Digital gold– Paytm launched “Digital Gold” by partnering with a famous gold refiner MMTC- PAMP. In this digital platform, you can buy, sell, or virtual gold. For this, you need to pay a basic fee for the delivery of the gold to your doorstep. Thus, Paytm has a long vision to encourage gold investment in India. It will not only help to earn high revenue but will also aspire the users to own Gold Bank Accounts.
- E-commerce Vertical– Paytm diversifies its e-commerce services by introducing Paytm mall (Marketplace). It attracts numerous sellers selling commodities like shoes, apparel, electronics, jewelry, etc. on its website. It was also testing a feature called Paytm Bang. With this feature, buyers can collectively buy a product to avail of discounts.
- Services to Merchants– Merchants pay Paytm for various services like device usage, loyalty, cloud solutions, accepting cards, EMIs, BNPL (Buy Now Pay Later) Payments, etc.
- Advertisements and Marketing– As you have seen above Paytm has become a popular platform for potential brand advertisements. Therefore, Paytm ads earn significant revenues from the respective brands whose ads are displayed on Paytm.
- Others– Other revenue sources include bill payments, ticket bookings, coupon codes, voucher cards, Paytm Payments Bank, and Paytm Gateway Solutions.
Winding Up the Business Model of Paytm
Paytm is a leading fintech enterprise with a market capitalization of INR 339.96 billion. Also, it has a strong foothold in the financial and service sector of India. With its successful business model, it grew up from a start-up to a behemoth company. It is beneficial enough to accomplish various transactions ranging from mobile recharges, and fuel payments, to the payment of utility bills. Thus, it smoothly eliminates the necessity of carrying cash, debit cards, or credit cards.
