Home Business & Management How Paytm makes money| Business Model – 2020

How Paytm makes money| Business Model – 2020


Have you ever wondered how Paytm and all other e-wallet service providers earn money after providing us service like 0% charges on money transferring ? Let’s see, how Paytm earn and what is its business model.

They provide many services in one application so that its user has no need to search everything on internet.

And all these services contribute to their revenue, obviously on commission basis.

I am pretty sure you must have used Paytm once, maybe whenever you thought of transferring money to your friends or family or maybe when planning to go for a movie with friends and booking movie tickets through Paytm.

It provide numbers of services to its user only in one application which makes it likable by many. And this can be one of the reasons for which users prefer Paytm instead of using any other online payment applications.

Paytm is an online payment system which enables users to pay to another user within seconds. It is also becoming an emerging e-commerce store.

Let’s understand more about the operations of Paytm, its business model and revenue model and who founded it and its history and most importantly how it earns money.

Table Of Contents

  1. About Founder and CEO.
  2. History
  3. Services
  4. How do they have the first mover advantage in Indian market?
  5. How does Paytm earn and Paytm Business Model?
  6. Investment, Acquisition and Future Aim
  7. Conclusion
  8. FAQs

About Founder and CEO

It was founded by Vijay Shekhar Sharma in August, 2010 with the motive of providing a platform for online payment. It’s headquartered is in Noida, Uttar Pradesh, India.

Vijay Shekhar had done engineering from Delhi College of Engineering (or DTU). In college, he started the website indiasite.net, which he sold at 1 million. In 2000, he started a company One97 Communications which is the parent company of Paytm.


It was founded in 2010 with the investment of $2 Million by Vijay Shekhar Sharma in Noida, Uttar Pradesh, India. It is a subsidiary of its parent company One97 Communications. One97 Communications provides mobile content like news, cricket scores, ringtones, jokes and exam results.

Vijay Shekhar Sharma

They had raised funding from 2 investors

Promoters: One97 Communications37%
Investment Received

They have 11.8 million registered customers in August 2014 to 104 million in August 2015. As per the last report, on July 2019, the cunsumer base is 450 million and active customers are 150 million.

As per the Profit and Loss Statement of One97 Communications, they had incurred a loss of Rs. 4,217.20 crores in year 2018-19 and Rs. 1,604.34 crores in year 2017-18.


There are lot of services which are provided by them. Let’s discuss them one by one.

We know it is an e-wallet and after its successful market capturing in India, they had launched its Payments Bank and also provided a debit and credit card facility partnering with Citi Bank.

They also became an e-commerce store and named it as Paytm Mall. Also, it allows user to pay its insurance, electricity and water bill, book train tickets, booking cab, and bus ticket from their application.

Services by Paytm

You can book movies ticket, amusement park tickets, flights tickets, recharge and many more things.

They had partnered with many companies like UrbanClap, OYO and many more to provide more and more services from their platform and ensure customer get everything only on one platform.

They had also introduced Paytm First through which user can earn loyalty reward and scratch cards by playing games.

Paytm First

They also had a feature of Paytm Money, which allow user to invest in mutual funds online.

Paytm Money

Recently they had also introduced a Paytm Education and Career for exploring the information about colleges and examinations like CAT, JEE, NEET etc.

Paytm Education And Career

They are planning to enter in stock broking market and allow its user to invest in equity stock and they will work as a broker for them. Though Vijay Shekhar, founder of the company, said “We are payment service provider and will focus on that”.

They also provides payment gateway and had a tie-up with IRCTC and Uber for providing their payment gateway.

Paytm and IRCTC tie-up

They also introduced Paytm Business, which allow local vendors to accept payment online and quick just by placing a QR Code, which will be scanned by the customer for transferring money.

Paytm Business

How do they have the first mover advantage in Indian market?

It was the first online payment service provider in India which was marketed well in Indian market. They launched their services at perfect time and it was marketed so well that people just remember its tagline which was “Paytm Karo”. It had captured in everyone’s mind that for online payment, there is only one application, that is Paytm.

Paytm Karo

Although they had spent much on their branding and marketing budget. According to the livemint.com, the marketing budget was Rs. 500 crores in financial year 2015-16 and it exceeds in 2016-17 by Rs. 100 crores.

Furthermore they got an extra-ordinary boost in its revenue as Digital India Campaign was launched and announced by Inidan Prime Minister, Narendra Modi on 1 July, 2015.

There were so many competitors like Mobikwik, RazorPay, Freecharge and after the launching of Unified Payment Interface (UPI), Phonepe and Google Pay also started competing with Paytm. So, for getting more customers, they provides cash-backs and offers on every payment.

Their Unique Selling Proposition (or simply USP) is, they integrated almost each and every service of daily use in one application which will allow user to do everything from one app and the user don’t have to change applications again and again.

Before proceeding further, go through this video for better understanding

How does Paytm earn and Paytm Business Model?

Paytm does not charge any commission or extra fees on transferring money from wallet to wallet or bank to bank transfer.

This arise a question that how really they get revenue or what is its revenue model?

  • Firstly, they provide so many services at one platform like mobile recharge, train tickets booking, bus tickets booking, insurance and may more, and also charge commission to the company for every service they provide.
  • Secondly, they earn from their advertising. They allow advertisers to display their advertisement on their website and charge them for this.
  • Thirdly, they also charge some percent of fee for transferring amount from wallet to bank. And this also contributes in their revenue.
  • And lastly, they had invested in many startups, so they also get returns from these investment and acquisition.
Paytm Business Model

Investment, Acquisition and Future Aim

Vijay Shekhar wants to turn its startup into an internet conglomerate. So, he had acquired and invested in many startups of different branches.

Following is a list of some startups which were acquired :or invested-

Company’s NameYear of Investment or AcquisitionServices provided by the Company
Plustxt2013Allows fast texting in any Indian language.
Jugnoo2015Jugnoo is cab aggregator which raised funding of $5 million by Paytm
Shifu2015AI Based startup
Near.in2015Local Service start up
LogiNext and XpressBees2016Logistics Startup
QorQL2017Healthcare startup uses AI for to help doctors
Insider.in2017Online ticketing and event platform whose majority of stake was acquired by Paytm
Acquisition & Investment

They had also received an award of Outstanding Startup of the Year Award at Forbes Leadership Awards 2016.

As per the reports, they aims to achieve 250 million of active user base up-to March 2020.

Here is some data which will help you get to know more about the company :-

FoundedAugust 2010
HeadquartersNoida, Uttar Pradesh, India
Founder and CEOVijay Shekhar Sharma
ServicesDigital Wallets
Net Loss (2019)₹3,579 crore (US$500 million)
Parent CompanyOne97 Communications Ltd.
Users350 million (FY 2019)
About Paytm


So, at last it’s clear that the main revenue model of the company is by the services they provide like insurance, mobile recharge, train ticket, bus ticket etc. and from advertisement on their website.

Further, they generate revenue from the startup in which they had invested and from the fee that they charge for transferring money from wallet to bank account.


How Paytm works?

Paytm is a digital payments platform that allows you to transfer cash into the integrated wallet via online banking, debit cards, and credit cards.

In how many countries Paytm operates?

Currently, Paytm is operating in 16 countries and expanding in more countries.

Is Paytm secure?

Paytm is completely secure and it is PCI DSS compliant in terms of security. Also, All financial transactions on Paytm are done with 128-bit encryption SSL security.

Who owns Paytm?

Paytm’s parent company is One97 Communications.

What are charges for transferring money from Paytm.

Paytm doesn’t charge anything on transferring money from Bank to Bank or Wallet to Wallet. But it charges when you transfer money from Paytm wallet to Bank Account. The commission is 5% of the transferring amount.

Comment and let us know if you liked this and if you want us to write about a specific company’s business model, leave a comment below.

And have a look at the LinkedIn business model which is the largest professional social network platform: https://indieseducation.com/linkedin-business-model



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