Business Model You Need to Know Behind the "Go Cashless" Strategy of Paytm

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The name itself suggests the model of Paytm, which means Pay through mobile. It was founded by Vijay Shekhar Sharma in 2010. Initially, it started as a mobile and cable recharge website. But later it introduced itself as a virtual bank and online marketplace. Today Paytm is India’s largest e-wallet platform. It also offers services like Paytm mall, Paytm smart retail and gamepad. One of the major reasons for its diversification is its significant cashback model.

So How Paytm make money? The major customer segments of Paytm are students, travellers, adults, hotels and small businesses. Paytm is well oriented around the idea of speed and convenience that is also the value proposition of Paytm. The basic cost structure of Paytm includes customer acquisition, advertising, the salary of employee and app improvements and maintenance.

After starting out as an online recharge platform, Paytm made the great shift to its online marketplace where you can book services from flight to movies, online shopping, buy or sell digital gold also and then the most prominent virtual bank. It’s actually the virtual bank model that brought the largest customer base to an app in India. By 100 million downloads company crossed the huge milestone in 2017. Paytm is only operating on channels which are mobile application and website.

As of 2019, Paytm generated $510 million in revenue. There are various types of services through which Paytm earns its revenue, but the two major sources are escrow accounts and commission from the transactions made by consumers. Through marketplace, paytm has given the opportunity to sellers to put their products on platform and generates revenue through fees and commissions charged on these sales. Paytm also earns interest from the money stored in customer’s e-wallet. Customers also pay paytm to convert digital gold into physical gold and get that gold delivered. Key resources for its revenue generation are technology platform, partners and the RBI license. The platform has various means through which paytm is promoting its products

and services, out of them most prominent is company’s official website.

Paytm also taking advantage of internet arbitrage, where Paytm deposits the money with some other bank which provides higher interest than the interest offered by Paytm bank on its deposits. The difference between both interests becomes profit. The time of demonetisation was proved to be one of the best times for the company’s growth. Lot of new customers downloaded the app at the time for online transactions. Paytm has used several tried and tested marketing ideas to support its model like soldier mobile, cashback strategy,

automatic messages and the crucial one, title sponsorship of indian cricket by signing a deal with BCCI and retained the sponsorship for 5 years. In india, cricket is not less than a religion, so being a title sponsor for such a long time can proved to be the ace for bringing new customers.

Paytm made the largest contribution to carry indian financial sector on to the brink of digital and cashless economy.

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