Paytm Business Model: An Overview of How Paytm Business Operation and Revenue Creation

Paytm Business Model: An Overview of How Paytm Business Operation and Revenue Creation

Financial Technology (FinTech) is an essential sector that offers innovative financial solutions for consumers and businesses. It facilitates seamless online transactions, enabling consumers to pay merchants in one click. It currently empowers 29 million online transactions daily. Plus, its market size was $112.5 billion in 2021. 

This figure is estimated to reach $332.5 billion in seven years. India's Fintech market contributes to this impressive growth. India has an average adoption rate of 87 percent compared to 67 percent globally. It has over 6,600 FinTech startups. Amongst these many companies, only a few lead the country’s FinTech industry. Paytm is a payment platform founded in India. It provides diverse and efficient payment solutions for over 350 million users. This is possible via the Paytm business model. Read on to learn about the Paytm business model and why it’s integral to its profit generation. 

A Brief History of Paytm

Paytm is a subsidiary of One97 Communications Limited–a mobile internet company. It was founded by Vijay Shekhar in August 2010, with a startup funding of $2 million. 

The Noida-based company initially offered direct-to-home (DTH) and prepaid mobile services. Paytm has since expanded its service, offering partner-based lending and loan repayments. 

These services increase revenue via EMI (equated monthly installment) payments and collection fees. Let’s consider some significant moments in Paytm’s growth. 

  • 2014: the company launched the Paytm wallet

  • 2017: Paytm app downloads surpassed 10 crores. 

  • 2018: it enabled merchants to receive Paytm, card payments, and UPI into their preferred bank accounts without any charges. Also, it partnered with Marquee lenders to offer postpaid, business, and personal loans. 

  • 2019: the FinTech company launched Paytm First, a membership program.In the same year, it rolled out a credit card.

  • 2021: launched its IPO, secured about $2.4 billion 

Paytm Mission, Value Proposition, and Milestone

Paytm’s current goal is to extend its customer base to 500 million. The FinTech company aims to achieve this via its value proposition. Its value proposition involves various payment methods, including digital and traditional options. Regardless of their business size, merchants tap into Paytm’s ecosystem. 

In India, about 95 percent of transactions are done in cash. This isn’t flexible, particularly for consumers that seek cashless transactions. Paytm resolves this via credit card payment, e-wallet, and UPI transfer. Since its establishment in 2010, Paytm has achieved several milestones. 

  • It supports about 20 million merchants (at the time of writing) on the platform 

  • The company serves over 300 million registered users. This includes over 150 million monthly active users (MAU) and 18 million daily active users (DAU). With this, it has the largest user base in India’s digital payment ecosystem. 

  • Within FY 2021-22, it had a gross merchandise value of $110 billion 

  • It had a nine percent UPI market share in 2021

  • In 2017, the platform hit 100 million downloads 

  • In 2019, it had one of the largest payment gateway market share in India 

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Paytm Business Overview

Paytm business model involves providing a payment ecosystem for customers and merchants. This facilitates transactions for both parties. For instance, consumers access diverse payment methods, and merchants can close deals via Paytm services. 

The brand business model integrates several approaches to achieve organizational goals. This includes revenue model, event sponsorship, fundraising, promotion, and partnership. Before reviewing Paytm business model, let’s consider Paytm’s target market and services. 

Paytm Target Market and Services

Paytm focuses on tier one and tier two urban cities. This contains young and middle-aged individuals in need of an accessible payment gateway. Its market segmentation covers smartphone users seeking cashless transactions. Paytm delivers its services to customers and merchants. This includes e-wallets, recharge services, and UPI money transfers. 

Paytm for Customers

Paytm offers payment, commerce, and financial services to its customers. These expand into smaller services addressing specific user needs. They include: 

  • Paytm Wallet

    It stores digital currency, allowing spending on different merchant sites and widespread adoption. The Paytm wallet supports P2P (peer-to-peer) payments in gas stations and malls. P2P transactions occur when two entities exchange value. This usually involves money or goods/services without any third party. 

  • Ticket booking

    Customers can book a movie, bus, flight, and train ticket. 

  • Recharge services 

    It supports the renewal of mobile subscriptions. It expanded its services to serve as a one-stop shop for recharge subscriptions. This includes TV, metro, and data card subscriptions. 

  • UPI money transfer

    Pay online or in-store directly from a bank account. This also allows users to send and receive money. 

  • Paytm bank

    A secure account with real-time transaction updates. 

  • Digital gold

    It allows customers to buy and accumulate digital gold. 

  • Postpaid

    It allows users to spend credit for shopping online. 

Paytm for Businesses 

Paytm offers four major services to merchants on its platform. This includes: 

  • Consumer payment

    It enables small businesses and merchants to receive payment in-store and online 

  • POS billing software 

    Paytm’s pos billing software supports retail business management. This involves billing and online receipt, vendor, and purchase management. 

  • Developer services

    Paytm's business model factors in transaction security. To achieve this, it offers Paytm AI (a complete end-to-end fraud management tool) and API for secure payments. 

  • Business Ads 

    Vendors can find prospects on Paytm and advertise their products/services. 

4 Ways Paytm Runs a Successful Business model 

Paytm business model operates not only on its services. It encompasses strategies for generating cash, brand promotion, and business partnership. This is essential to sustaining business growth, maintaining a significant market share, and expanding payment solutions. Here’s an overview of Paytm business model: 

Revenue model 

The Paytm revenue model generates cash to sustain the company’s business activities. This comprises merchant discount rates (MDR), convenience fees, commissions, and more. Here’s a breakdown of the said revenue generation strategies: 

  • Merchant Discount Rate (MDR)

    MDR is a percentage fee, usually between 1-2 percent, that merchants and vendors pay to use a platform’s debit/credit card services. Paytm’s MDR for wallet, net banking, and credit card is 1.99 percent. It charges INR 5-65 for annual UPI subscription.

  • Convenience Fees

    Customers pay a convenience fee to execute specific transactions on Paytm. For instance, you pay between INR 1-6 for mobile currency recharges. You pay at least INR 100 for electricity, gas, and water utility bills. 

  • Commission

    Paytm business model incorporates partnership. The brand’s financial institution partners deliver products and services like loans and debit/credit cards that users need. Paytm receives commissions for supporting said payment solutions on its app. 

    For instance, it earns a percentage sourcing fee for loan disbursal. This contributed to its financial service business growth which increased by six percent in Q1 2022. The FinTech company earns commission from insurance partners and an upfront fee for distributing cards from financial partners. 

Event Sponsorship and Promotions 

Cricket, the country’s most popular sport, has a massive fan base with over 136 million followers. This allowed Paytm to connect with a large audience and boost brand awareness. Paytm launched its cashback Dhamaka. This was a branded festival that rewarded customers for transferring money. 

This time-limited event had two offer periods between October and November 2021. This incentive encourages customers to increase their usage of Paytm’s services. Besides event sponsorship, Paytm deploys ads for promotion. The FinTech company uses social media channels like Facebook and Twitter for advertising. Also, it promotes brand awareness via traditional channels like TV and newspaper. 

The “Paytm karo,” a short ad film, has become a memorable brand tagline. Besides ads, brands need organic ways to engage with their target audience. Paytm’s campus ambassador program injects human connection into its brand promotion effort. 

Its campus ambassadors represent Paytm in their respective institutions. They promote educational content about its products and offerings. Another promotion channel is the Paytm First Games. The app utilizes “invites” to onboard more users, having over 25 million users. Paytm First Games had an annual revenue of INR 1-100 CR


Paytm fundraising pulls investment from financial partners with stakes in the FinTech company. For instance, Paytm's Series G financing round raised $1 billion. This came from SoftBank Vision Fund, Ant Financial, and Discovery Capital. 

In 2021, the brand had an initial public offering (IPO) that attracted $1.1 billion in investor funds. Canada Pension Plan (CPP) Investment Board, Blackrock, and Birla MF were some investor partners in this anchor round. 


Paytm's key partners stem from different industries, including pharmacies, hotels, and insurance companies. The company collaborates with the companies to offer its services. 

Paytm's partners include Visa, HDFC bank, Shopify, Zoho, and Shopmatic. The brand helps merchants grow their business and connect them to the right customers. This occurs via the Paytm Partner Program. 

Success by the Numbers: How Paytm Dominates India’s FinTech Industry

India’s FinTech market is a multi-billion dollar sector. As it grows, the market will witness more businesses pick a spot in it. Nonetheless, there are some dominant FinTech companies in the space. This includes brands like Razorpay and CRED, among Paytm’s competitors. Let’s consider some metrics to identify the top player in India’s FinTech space: 

  • Razorpay. Revenue 2021: INR 841.2 Crore; more than 8 million businesses 

  • Cred. Revenue 2021: INR 95.5; about 7.5 million active users

  • Paytm. Revenue 2021: INR 5,24.3; 350 million active users and over 20 million registered merchants. 

Paytm stands out as India’s dominant FinTech brand based on revenue and number of users. 

Key Takeaway: What Entrepreneurs can Gain from Paytm Business Model

A business model helps structure your business activities for profit generation. It’s essential as you need profit to sustain your business growth. Also, a business model involves strategic plans that improve your marketing. Here are three points from the Paytm business model valuable to your business growth: 

Identify your audience, then buildd a product

You should identify your target market and prospective buyers therein. This helps you tailor your brand message to your target audience's needs. Afterward, you can buildd a user-centric product. 

Make your customers your marketers 

Onboarding existing customers to market your brand buildds trust in prospective customers. Also, this serves as social proof, which buildds a more authentic human interaction. 

Buildd your startup with existing solutions

Entrepreneurs buildd new products or solutions with no existing market or audience. This results in having cost-intensive products that no one needs. You can quickly buildd robust, cheap, and usable products with existing solutions. Remember: apply available tech to craft solutions your customers seek. 

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Paytm Business Model FAQs

Here are four frequently asked questions (FAQs) about the Paytm business model: 

How does Paytm make money?

Paytm charges a convenience fee when customers use the platform for payment. It receives transaction fees from SMBs using the Paytm wallet and credit card. 

Is Paytm for business free?

Paytm has a set price or service charge for merchants using its online payment services. There's no initial payment or recurring charge to set up and operate a Paytm business account. 


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