The Business Model of Paytm

3 Oct 2019  Read 7703 Views

Did you ever think that a 'Half cup chai' could be bought through online payment? Being a 90's kid, I still remember the struggle to get the change of a Rs. 500 note to buy my favorite Rs 5 Ice-cream. That excitement of scratching the recharge coupon in the hope of getting some additional benefit.. In 2010 came  a revolution when Vijay Shekhar Sharma launched Paytm.

Those were the days when Cash backs were the only source of my pocket money. I cannot forget those fights with my sibling to divide the number of recharges and bill payments of the house.
My life was always on track until this question crossed my mind, “How does Paytm earn money?” I have always studied that a business is suppose to reap profits. Then how was Paytm meeting both ends?

Well, I got my answer when I got to know about its mind-blowing Business Model.


Paytm is a digital wallet service working both through an application and website owned by One97 Communications Ltd. Paytm business model could be studied by segregating the point of revenues as follows: -

Mobile Revenue Model

Paytm promotes the payments of recharges and bills as it collects a commission from the network provider. Now the cash-backs makes sense as they are sponserd by those network providers. Isn't it cool that this is one of the significant sources of income for the company!

Interest on Mobile Wallet Funds

Another cool revenue model of Paytm is that it actually earns interest on the money that we keep in the e-wallet? Paytm opens an escrow account with one of the partner banks and earns a certain interest mutually decided between them. Imagine the revenue it would be generating with 10 million-plus users!

Paytm Mall

The online marketplace of Paytm is a perfect platform for the vendors and seekers. The company charges a commission between 5-20% of the products sold. According to financial results for fiscal 2018, Paytm mall doubled its revenue which touched a high of 775 crores.

Paytm Payment Gateway

One thing that has become a compulsion today is the Paytm QR code. Instead of searching for hard cash, my eyes look for the QR whenever I shop something. It is the same story with all of us as it is so convenient and hassle-free. As an additional bait, there is cash-back too. Paytm charges a fee between 1.5-2% from the sellers using this service.  According to Financial Report 2018-19, the company reported 5.5 billion transactions. 

Data Analytics

As we know that data is the new oil today, Paytm also plans to open their consultancy services. Imagine the data that the company would have by facilitating millions of transactions and how useful it would be for the other companies. It’s a win-win situation for Paytm.


Yes, currently the company is not making profits as it is focusing on building its brand and expanding its business. From 'Gol-Gappa' vendors to those big supermarkets, the company has extended its arms in every possible direction and this strategy will lead them to profits in the upcoming years. Paytm today has become a part of our everyday lives. The famous line, PAYTM KARO.. is truly impactful and will continue to attract customers.

About the Author: Deb P Samaddar | 248 Post(s)

Deb is a keen learner and eager to learn about the finance world. He is that person who would never stop talking, but my oh my, the words he uses, are not something a normal human would in a regular conversation. While the conversations are well, interesting, the write-ups are faultless. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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