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Paytm Business Model - How does Paytm earn money

Wednesday, 16 January 2019

In today's article, we will see how the Paytm earns money because it will surely come to the attention of many people that what is the business model of Paytm. After all, it is also making money or not because Paytm gives us so many offers and cashback. So let us know the short history of Paytm.

what is paytm?
Paytm, which means the pay-through-mobile. It is an Indian E-commerce payment system and digital wallet company, which has its headquatered in Noida. It is a  subsidiary of  One97 Communications Ltd, which was launched by Founder Vijay Shekhar Sharma in August 2010 as the online mobile recharge website.

Funding & shareholders
If talking about Paytm's Funding round, Paytm's parent company, One97 Communications, has received funding 11 times, under which they have taken a fund of 2.8 billion $, from which they have invested  2.2 billion $ in the 4 funding rounds to Paytm as a lead investor. Paytm founder Vijay Shekhar Sharma has only 16.36 % stake and the rest 83.64%  stake is directly or indirectly  public issue. In which  Alibaba group has the largest shareholding stake in paytm then coming Ant Financial, Softbank, SAIF Partners, Berkshire Hathaway and Ratan Tata himself having stake in Paytm.

Revenue Model of Paytm

1. Marketplace ( Paytm mall )

Marketplace, which we call Paytm mall, its revenue model is the commission based like rest of the E-commerce company, which takes commission from its sellers, means sellers themselves,  can register on Paytm mall  and list their products, and whoever placed an order through Paytm mall will be forwarded to the seller &  after which delivers the product according to the customers order and in turn earns money from which it gives Paytm their commission.
So let us see what commissioning and charging of Paytm mall on the product of sellers.

2. Recharge Services & Bill Payments
Paytm controls over 30% of recharge market, it has lot of tie-ups with the telecom companies from whom it commissioned. Suppose if the Airtel's recharge  is made from the Paytm, it will take its commission from the Airtel company or  you paid your house light bill, landline bill,water supply or gas bill with Paytm or book a movie tickets, then it takes a commission from a different companies.

3. Payment Gateway
You may be thinking that what is the payment gateway, so for example - you are ordering food from Zomato and you want to pay the payment to Zomato. so you will choose Paytm Payment Gateway option in Zomato, through which  paying money  will first go to Paytm and the Paytm will take some commission from it and the rest will transfer the payment to Zomato. Similarly, the different websites and applications use the Paytm Payment gateway  for receiving money from their customer from which Paytm earn commission.

4. Paytm wallet
Sometimes you have thought that why does anyone who receives cashback always go to Paytm wallet, why do not go to Paytm Payment Bank, because  Paytm wallet is a semi close looped wallet. The cash or amount in the Paytm wallet is deposited in Escrow account with a partner bank. ( as per RBI guidelines )Through which Escrow account provide some interests to Paytm. Or if you want to transfer your Paytm wallet amount to your bank, it charges 4% on it. In his way Paytm makes money from you.

5. Digital Gold
Paytm has partnered with gold refiner MMTC-PAMP to launch ‘Digital Gold’ that will allow its users to buy, sell, and store gold digitally without any additional cost.As you all know that gold is considered a better investment in India, which you can buy as a digital gold and hold it in Paytm, if the price of gold increases, you will get the money and it Earn your commissions and if they decrease, then also they will earn commission from you.

6. Paytm Payment Bank

Like other Banks are earning money from their users, similarly Paytm also earning money from their users.

7. Couponcodes/ Voucher cards
Paytm earning money from couponcodes, voucher cards or you can say it as advertisement, because they makes other companies advertisement in the form of promocodes and voucher cards on their website through which paytm earns money from them.

So let me tell you that complete model of paytm is commission a based.

Now look at their financial statement of March 2018, how much profit they have earned, total revenue of Paytm is 3234.57 crores and their total expenses is 4718.50 crores, and their total loss is 1490.47 crores, it is because Paytm is currently working to create its own customer base.For which he provides a variety of offers and cashbacks to his customers and continues to make many advertisements. In the next upcoming  years, the paytm will  come into profit because the number of people using the Internet in india is increasing rapidly.

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