Paytm Business Model: If a person is interested in e-commerce and technology and wants to know about the business model of technology and e-commerce companies, then this is the right place for them. Today, technology has come a long way and progressed so much that everything is done online. Even payments and monetary transactions also take place online. A lot of online websites and mobile apps have emerged that are used by people for commercial purposes. And one such app that has gained giant popularity in India is Paytm. In less than a decade since its existence, Paytm has earned the trust of the Indian public which is saying a lot when it comes to commercial transactions. Paytm along with its success, has also paved the way for a lot of other mobile applications and websites to do business in India.
Paytm is an Indian financial technology company that deals in e-commerce transactions. The company is based in the city of Noida in India. The company keeps in mind the diversity that India has and offers its services in 11 different languages. Paytm provides services like payment of utilities, film ticket bookings, mobile recharges, etc. on its platform. Through the Paytm QR code, the app can also be used to make payments at grocery stores, restaurants, pharmacies, parking, etc.
Paytm came into existence in 2010. Vijay Shekhar Sharma founded the company after raising 2 million US Dollars as an initial investment. Initially, only services like DTH and mobile recharge were available on the platform. But later in 2013, options like landline bill payments, postpaid mobile bill payments etc. were added to the platform. Paytm Wallet was launched in January of 2014 and was picked up by Uber and Indian Railways as an online payment option on their platforms. Movies, events and amusement park booking options were also launched by the company in 2015. In the year 2017, Paytm crossed a huge milestone as the company’s app achieved the feat of 100 million app downloads. It was the first Indian app to achieve that. As of 2017, the company is considered to have an evaluation of approximately 7 billion US Dollars.
Are you curious about how Paytm make money? Let’s get started!
The business model adopted by Paytm is the marketplace e-commerce business model which is considered to be the best platform in the web space. The company has gone through a lot of changes since its inception. What started as a platform for mobile and DTH recharge has today become an e-commerce giant. There are a lot of segments that come under the umbrella of Paytm’s business model that need to be studied to get a full understanding of how Paytm earns money.
The customer base of Paytm largely consists of people who use mobile phones. Paytm strives to make good connections with its customers. That is why, the company has a customer care center that works 24 hours, 7 days a week to connect with the customers and solve their queries or problems. The features on the app along with the app itself are easily accessible. So, they are user-friendly for the customers.
Many Indians wanted to make use of the Internet for commercial purposes but things did not quite turn out for well for them for various reasons. It is at that time that Paytm arrived in the market as a good option and the people jumped on that.
The initial service proposition with which the company started its operations was the recharging business. Later, the company realized that they need to diversify and get more options. So, they brought in more services like Digital Gold and Paytm Wallet to attract more customers. All these efforts by the company helped it gain the attention of the Chinese giant Alibaba. Alibaba now invests huge sums of money in the company which helps Paytm a lot. The company has also used advertising to increase its customer base. Paytm realized that Cricket is a great medium to reach out to its customers so they started showing ads for Paytm during Cricket matches. Paytm was also the official sponsor for the 8th season of IPL (Indian Premier League).
Paytm has various means through which it attracts the customers to its products and services. The first and foremost is the company’s official website. The company has also gotten into partnerships with many vendors and clients who promote the enterprise. One occasion when Paytm really capitalized on an opportunity was at the time of demonetization. A lot of new customers downloaded the Paytm app at that time for commercial transactions and this gave Paytm a chance to grow further.
There are a lot of customers that Paytm has to cater to and that is where most the company’s money goes. The company has to keep the platform up to date and that requires a lot of money as there are constant changes and innovations needed to maintain and improve the platform. Customer acquisition is another expense that the company has to bear. A lot of companies have to pay large sums of money to acquire new customers. Therefore, sometimes the expenses are more than the revenue in the initial stages. Since Paytm is a company that deals with money and commercial transactions, there is a lot of risks involved in terms of fraud, money laundering and security breach. Thus, it is of utmost importance that the security of the platform is top-notch as the company has to cater to more than 65 million customers. So, Paytm has to spend money in that department as well.
As of 2018, 3,314.8 crore rupees have been accumulated by Paytm as revenue. Paytm earns revenue through various types of services that it provides on its platform. The two major sources of revenue for the company are escrow accounts and commission from transactions made by customers. The following are the services from which Paytm earns its money:
| Paytm Marketplace: | With the introduction of Paytm Mall, Paytm has given an opportunity to the sellers to put their products on sale on the platform. Paytm generates revenue through fees and commissions charged on these sales. |
| Bill Payment: | Paytm gives the option to its customers to pay their bills online through the Paytm platform. Bills of gas, electricity, telephone, water, etc. can be paid through the mobile app. Paytm makes revenue by charging a commission on these transactions. |
| Paytm Wallet: | Through the Paytm wallet, which is an RBI approved semi-closed wallet, an individual can store and save money in the digital format and then use it to pay for different goods and services. Paytm earns interest from the money saved in the wallet. |
| Recharges: | Mobile and DTH recharge are what the company started its operations with. In the beginning, this was their main source of income. Today, the company earns a commission of around 2 to 3 percent on every recharge transaction that takes place on its platform. |
| Digital Gold: | After partnering with MMTC-PAMP, which is a well known gold refiner, Paytm started ‘Paytm Gold’. This allows the customers to sell, buy or trade gold online on a digital platform. The customers can also pay Paytm to get the gold delivered to their houses. |
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Vijay Shekhar Sharma founded Paytm in 2010 and is also the CEO (Chief Executive Officer) of the company.
Paytm has a bunch of services that it provides to its customers. Paytm Mall, Paytm Wallet, Digital Gold, etc. are some of these services. In the case of some services, the company charges a commission on the transactions to earn money. In other services like Digital Gold, the company charges a fee to deliver the gold to the customer’s place.
There are a lot of ways through which Paytm manages to attract its customers. The company partners with clients who help Paytm in promoting its services to the consumers. The company also spends large sums of money on marketing and advertising to get its products and services out to the public. Paytm also became an official sponsor of IPL in the tournament’s 8th season, as the people at Paytm knew that cricket attracts a lot of eyeballs and it would be a good strategy to promote the company during the cricket matches.
In the case of recharge transactions, a commission of 2 to 3 percent is charged by Paytm from its customers.
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Since its inception in 2010, Paytm has grown exponentially and today has a large customer base in India. The company has managed to capitalize on various opportunities like at the time of demonetization. The company has been innovating consistently and putting out new services for its customers that make the customers’ lives easy. Paytm business model is something that other up-and-coming companies can learn from.
So, this was pretty much all about the business model of Paytm. Hope all the information will come handy and useful. If you got any queries, feel free to comment down. We would love to assist you on the same.
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