Paytm Business Model - How Does Paytm Makes Money

Anagha S Anagha S
Feb 18, 2022 5 min read
Paytm Business Model - How Does Paytm Makes Money

Paytm is India’s largest platform for mobile payments and commerce. The word is an abbreviation for “pay through mobile ". This digital payment system and fintech company have its base in Noida. It was founded in 2010 by Vijay Shekhar Sharma in Noida with an initial investment of $2 million.

Beginning as a prepaid mobile recharge platform it later expanded to be a single destination for all kinds of bill payments and much more by 2013. Today the platform operates in more than 11 Indian languages and is accepted across almost every grocery store, restaurant, pharmacy and whatnot. In 2020 the revenue of the company was increased by 10% to reach Rs.3629 crore.

This article will explore the business model of Paytm to understand how Paytm earns money.

Business Model of Paytm
Main Products and Services of Paytm
Revenue Segments of Paytm

Business Model of Paytm

The business model of Paytm is worth looking at due to its multipronged approach to ensure a seamless experience for both the company as well as the customers. Let's look at the various components of the business model canvas of Paytm to further understand its details for generating revenue and constantly being at the forefront of innovation and providing the best possible online services to its clients.

Key partners of Paytm

With the kind of services that Paytm offers, it had partnered with a huge number of insurance companies, hotels, shopping centres, pharmacies, hospitals and every other institution where transactions through Paytm is accepted now.

This collaboration with a plethora of organisations to gather bills and payments for various services enabled Paytm to expand its partnership over time. It has also partnered with banks to provide escrow services.

Key Activities of Paytm

The major activity carried out by Paytm is to facilitate the transfer of funds from one place to another. They also ensured that the best possible security is provided for the millions of transactions that are taking place through their platform.

Another important activity of Paytm includes preventing scams and other cyber frauds in its platform. Apart from that they also strive to make Paytm a single stop for all kinds of payments that an Indian household should take care of.

Value Propositions of Paytm

The prepositions that augment value for Paytm begins with recharging business. Initially providing prepaid recharging services it later expanded to postpaid services as well. It further expanded to creating a Paytm wallet which served as a parallel bank account for the clients.

From there Paytm has devolved into curating the idea of digital gold where customers can store gold digitally and later use them to complete transactions or even exchange it for actual gold of the same value.

Paytm has also set up various e-commerce verticals wherein it serves as an important component in the completion of transactions.

Key Resources of Paytm

There is absolutely no doubt that a company cannot survive without having an inexhaustible resource domain. As far as Paytm is concerned its biggest resource is its partners. As the company started to grow it received support and funds from many resourceful entities like the Alibaba group and Soft Bank vision fund.

One cannot overlook the amount of support that these resources give to their company. Another key resource that drives Paytm is its RBI license that lets Paytm legally operate the system of Paytm wallets.

It has revolutionised the idea of digital currency, especially during the time of demonetisation. Its first-mover advantage in the technology platform is yet another key resource of the organisation.

Cost Structure of Paytm

Being a service-driven technological platform, most of the expenses that Paytm has to bear is related to its own platform and customer acquisition. Apart from that a large part of its budget also goes into improving the security of the platform and preventive measures to avoid any kind of fraudulent activities. It also invests in systems to avoid the risk of money laundering.

Customer Relationship of Paytm

Handling over 65 million customers is not an easy job. To cater to the concerns and complaints of its clients Paytm has a customer support service that is functional 24×7. The customer can make use of phone calls or chat services to voice their concerns and get them rectified.

In many cases, it also has clear-cut directions to navigate the customer to whatever service they need on their own. These are accessible directly from the website or the app in itself.

Customer Segments of Paytm

The wide variety of services offered by Paytm is reflected in its multilayered customer segments as well. The most important customer segment of Paytm is the users of its e-wallet. This is mainly because of the fact that the wallet is like a flagship service of the organisation.

Another segment is that of the users of the app which constitutes the middle class of the country. Paytm is also seeing a growing segment of customers in the older age group as well.

Channels of Paytm

Considering the big name that Paytm is in India, there is no doubt that the primary channel of distribution of the company is its website and app in itself. Apart from that Paytm also ties up with the sites of their clients, e-commerce platforms, vendors sites et cetera to promote the platform. Paytm also ensures that they attract customers through advertisements and constant follow-ups.

Main Products and Services of Paytm

Paytm makes money through various businesses like Paytm mall, recharge services, ticket booking, bill payment etc. By facilitating a gateway solution to every transaction, Paytm ensures a steady flow of money.

The launch of Paytm wallet in 2014 was revolutionary as far as the company was concerned. Since then it has evolved as a parallel bank account as far as the users are concerned. They have also released a digital gold service wherein it allows users to buy gold digitally.

In future, they are also planning to collaborate with various developers so that the customers can convert their digitally purchased gold into finished commodities.

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Revenue Segments of Paytm

The major revenue segment of Paytm is through commissions that it derives from customer transactions that take place on its platforms. As mentioned earlier they have collaborated with banks to create escrow accounts facilitated by Paytm wallets. The company generates revenue from these escrow accounts as well. With every transaction, both Paytm and the partner bank receives a predetermined interest that was mutually agreed upon between them.

Revenue of Paytm
Revenue of Paytm

The following are the various businesses through which Paytm earns money

  • MarketPlace (Paytm Mall)
  • Paytm Wallet
  • Recharge Services
  • Bill Payments & Ticket Bookings
  • Digital Gold
  • Coupon Codes/Voucher cards
  • Payment Gateway Solutions
  • Paytm Payments Bank


How does paytm makes money?

The major source of revenue for Paytm is commissions, it charges merchants a small fee which is mutually agreed upon. It also takes commissions from the users.

Who is the founder of Paytm?

Paytm was founded by Vijay Shekar Sharma in 2010.

What is the revenue of Paytm?

The revenue of Paytm is around 3,187.6 crores INR as of 2021.

What is the valuation of Paytm?

The valuation of Paytm is $16 billion as of 2021.

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