How Does Paytm Work | Paytm How to Earn Money | Paytm Business Canvas & More

How does Paytm Make Money – A question that has arisen in our minds at least once whenever we made a transaction on this platform. Most of us are already familiar with Paytm. It serves as a platform where one can do several online money transfers, bill payments, window shopping, use e-ticketing services, and get a gazillion other services.

Being one of the trailblazers of the Indian digital payment system, Paytm has developed its own revenues which come in through its business channels. Paytm has 3 main businesses. Those being – a)Payment Services b) Other Financial Services c) Commercial and Cloud Services.

Among these 3, financial and payment services contribute to about 75% of the company’s revenues. But one needs to know in detail how the consumer-merchant network works in order to understand the answer to the question of how Paytm make money.

• What is Paytm? | How Does Paytm Work?
• Business Strategy of Paytm
• How Does Paytm Make Money? | Paytm Business Model 2022
  • Flagship Payment Platform
  • Financial Services
  • Cloud and Commerce Businesses
• FAQs on How Does Paytm Make Profit

What is Paytm? | How Does Paytm Work?

Paytm, which is “Payment Through Mobile”, is the leading platform for carrying our payment, e-wallet, and other commercial activities. Launched in 2010, this brand is an offshoot of the parent company One97 Communications.com. Paytm was first founded as an online mobile recharge platform.

Over the years, it transformed into an enterprise supporting online banking and marketing. Now, through Paytm you can digitally access baking services, bill payments, mobile recharge, and other marketing in a safe environment.

Paytm’s business model is built by providing payment opportunities to both merchants and consumers. This commercial ecosystem helps Paytm operate.

So, Paytm earns money by levying transaction fees for merchants and convenience fees for consumers. These charges can be found in a percentage of travel, ticketing, entertainment, and other commercial transactions.

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Business Strategy of Paytm

There are a few things we must first probe into so that we can better understand how Paytm works. Let us take a look at the business strategy of Paytm to know exactly how does Paytm make money. They are:

1. Key Partners of Paytm
   • Banks having escrow services
   • Shopping platforms
   • Movie Theatres
   • Hotels
   • Travel services
   • Insurance companies
   • Hotels
2. Overview of Key Activities
   • Payments – enables the transfer of funds
   • Fraud Protection
   • Wealth Management
   • E-commerce
3. Value Offers and Propositions
   • Paytm e-wallet
   • Digital Gold
   • Recharging business
4. Main Resources
   • RBI license
   • Partners
   • Tech platform
5. Revenue Streams
   • Escrow bank accounts
   • Digital Gold
   • E-commerce
   • Commissions levied
6. Cost Structure
   • Charges for processing payments (40%)
   • Promotional and marketing expenses (11%)
   • Expenses relating to employee benefits (25%)
   • Cloud expenses (7%)
   • Expenses relating to depreciation and amortization (4%)
   • Finance expenses (%)

How Does Paytm Make Money? | Paytm Business Model 2022

The following divided categories of the Paytm revenue model can make money. Check out them along with the business model of Paytm in this section.

• Paytm Wallet
• Recharge Business Services
• Bill Payments
• Digital Gold
• Paytm Bank
• E-Commerce Vertical
• Marketplace (Paytm Mall)
• Payment Solutions

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Here is the business model of Paytm which will help you figure out how Paytm earns money.

1. Flagship Payment Platform

All kinds of payments and financial services – together contribute to a large part of the revenue generated by Paytm. In the financial year 2021, Flagship payment services made up to 75% of Paytm revenue. It is nearly equal to 2,109 crores.

As mentioned earlier, Paytm offers payment services to both merchants and customers. According to data collected by RedSeer, the market share of Paytm is near 70% in wallet payments. The consumers have a plethora of payment instruments availing which they can get access to Paytm wallet, fastag payments, Bank accounts, Food wallet, EMI, and BNPL (Buy Now Pay Later) apart from bank card services.

Paytm UPI allows consumers to make e-payments whenever they want. Direct bank account transfers can also be done through this platform. The receiver’s contact number is all one needs to make successful payments through UPI. Although it is the 3rd largest platform, the company only has a 14% share in monthly digital payments performed through UPI.

In the case of merchants, Paytm enables payments made through the flagship payment gateway. This can be performed through all-in-one QR codes, point of sales (POS), and Soundbox.

For merchants, Paytm generates revenue by charging convenience fees and take-rates. For certain merchant products and services, the company earns money through a subscription-dependent system.

Do Refer: How does Discord Make Money

2. Financial Services

Mobile banking is one of the most sought-after services. Paytm offers it through 65 million Paytm Payments Bank accounts holding a deposit of Rs 5800 crore.

Paytm’s Buy Now Pay Later (BNPL) offer has attracted a lot of customers. Paytm Postpaid is a very attractive feature. Through this Paytm has a payout of three million loans and products which are post-paid.

Paytm has an insurance marketplace that lists products ranging across life and health insurance, policy management, and claim-related services. As of October 27th Paytm Insurtech has raised a whopping Rs 920 crore from Swiss Re, a global reinsurance firm. This was a few months later after it earned the Raheja QBE General Insurance program.

Paytm’s financial services branch provides wealth management by means of the Paytm money app which you should definitely check out. Moreover, this also includes mutual funds, gold purchases, and futures and options trading too. From these businesses, Paytm has gathered total assets worth Rs 5200 crores.

Paytm’s revenue is generated from sourcing fees levied on financial institution partners. Collection fees charged for loans, distribution fees in the case of credit cards, fees charged during equity broking, and commission while availing insurance premiums also contribute significantly.

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3. Cloud and Commerce Businesses

Paytm’s third line is commerce and cloud business. This allows merchants to better connect with consumers and offers cloud services to telecom companies, enterprises, fintech, digital platforms, ticketing, and gaming services. It also provides Paytm First. Paytm First is a rewards and loyalty programme to which users can subscribe for a premium membership.

As per the RedSeer platform, in the financial year of 2020, Paytm has managed to sell movie tickets on more than 5700 screens. With this, Paytm has become the second biggest booking platform.

At the end of the financial year 2021, Paytm has generated a revenue of Rs 693 crore from sales. This revenue is earned mainly by levying transaction fees from merchants in the ticketing business and convenience fees from consumers. Cloud business subscription fees also contribute to revenue generation.

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FAQs on How Does Paytm Make Profit

1. Is Paytm making Profit?

Paytm is generating a large chunk of contribution profit which has grown from 9% to 31%. So, yes Paytm has monetized most of its services and is making a profit on an increasing scale.

2. How do other payment apps like Paytm make money?

Most payment apps make money by levying transaction charges. Some also do that by providing premium services and advertisements too.

3. Is Paytm free?

Yes. Paytm Wallet can be used for free. Once you register, you can log in and use it anytime you like.

4. Does Paytm profit from both consumers and merchants?

The merchant-consumer ecosystem is a big way for Paytm to generate money by levying transaction and convenience fees.

Final Verdict

We hope that this article has brought to light the answer to how does Paytm make money. You can study further on business models of Paytm and other apps through our website newsozzy.com. We keep the website updated with all the trendy news updates regarding business, students, social media apps, etc. Keep an eye on our page and let us know your valuable feedback.