Paytm Case Study : How Paytm Leapfrogged as the Leading Digital Payment Platform in India
Catchy and sassy, this jingle has made Paytm a household name in India, especially after demonetization. This e-commerce payment system-meets- fintech company is based out of Noida, the NCR region. It is available in 11 Indian languages, which makes it a huge success in even tier-3 cities of India.
Paytm Case Study As A Successful Online Wallet
It started as an online wallet, later transformed into a complete mall and brought a paradigm shift to the retail industry. Be it a prepaid mobile recharge, paying utility bills, booking train tickets or shopping for clothes, this m-commerce store became the substitute for several apps. Users can recharge their DTH, book movie tickets, pay insurance premiums, shopping bills, contribute to the charity of your liking and get in the fast lane with Paytm FASTag. The M-commerce aspect of the portal lets several merchants list their products.
As we type, Paytm’s scope of operations and purview of services is expanding with the addition of services, brands and retail stores to its ambit.
However, it was just a matter of a few months, when we could see it at the forefront of the e-commerce revolution in India. It went on to become a semi-closed online wallet, and you could transfer money into it via debit card, net banking or credit card. This money can be used to almost everything that you need to pay money for via the Paytm QR code or mobile phone number. This m-commerce unicorn has evolved to an extraordinary level and become a preferred choice for payment. From a pharmacy to a department store, from a nukkad paan wala to the Delhi Metro, Ola Uber, every service provider accepts payments via Paytm. The latest addition to Paytm is its e-retail platform. It has more than seven million merchants using its QR code to accept or make payments directly via their bank account. Use cases such as Bus tickets and bill payments are just an aspect of it, and now it is a full-fledged e-commerce platform with online deals. The study about paytm case study is one the best experience in these days.
Paytm Timeline Case Study
Since its launch in the year 2010, Paytm has managed to fare well in the Indian market and broaden its horizon. Here’s the payments network’s journey at a glance.
Paytm was founded by Vijay Shekhar Sharma in August 2010, as a prepaid mobile recharge website with an initial investment of $2 million
Later, data card, DTH recharge, postpaid mobile and landline bill payments were added to the platform.
In 2014, the Paytm Wallet was launched, and the users could book their tickets on Indian Railways or pay for Uber rides via the wallets. The registered users of Paytm were 11.8 million in August 2014.
- The user base increased to 104 million in August 2015. The travel business exponentially and crossed $500 million for GMV run rate annually. The portal had a record booking of over two million tickets per month!
- In an ambitious step, Paytm’s parent company, One97 Communications acquired the rights to every national and international cricket matches taking place at the home ground for four years starting from August 2015. It is also the official partner for IPL Mumbai Indian team.
- The rights made Paytm a sponsor brand for a series, designating it as the title sponsor and giving it the broadcast sponsorship rights. The sponsorship rights for domestic,local cricket matches such as Duleep Trophy and Ranji Trophy were also included in this deal.
- Ant Financial Service Group, an affiliate of Chinese e-commerce company Alibaba Group, bought twenty-five per cent stakes in One97. This agreement raised $200 million for the commerce venture.
- Ratan Tata’s endorsement followed this investment. He made his fifth personal investment in the venture in a bid to boost the digital economy of India.
- The Business for Paytm was launched in ten regional languages.
- The Reserve Bank of India sanctioned an ‘in-principal’ approval for Paytm Bank.
Big Year for Paytm
- Movie tickets, event bookings, amusement park tickets and flight tickets could be booked on the platform. Paytm QR was also launched later that year along with gift cards.
- The American payment system company, PayPal filed a case on November 18, 2016, against Paytm in the Indian Trademark Office accusing the latter of copyright infringement and plagiarism for having a logo similar to its.
- This year, the fintech portal saw extraordinary growth as it was downloaded for more than 100 million times and became India’s first payment app to achieve that.
- The portal also launched Paytm Gold in 2017, where users could buy pure gold as per their capacity starting from Re. 1.
- Paytm Payments Bank was launched. The fintech unicorn also initiated, ‘Inbox,’ an in-app chat messaging platform that enables faster resolution of complaints and 24/7 support.
- One97 Communications Limited got funding from the venture capital firm SAIF Partners, which was its first institutional investor.
- Paytm raised $1.4 billion from Japan’s Softbank and was valued at $8 billion.
- Paytm launched an app for Canada for utilities and bill payments.
Another Milestone in 2018
- The e-retailer saw an unprecedented acceptance across the country as it let the merchants accept payments via UPI, cards and Paytm into their bank account directly. No charge was levied for any payment method.
- The Paytm for Business app was also launched this year, which was later rechristened to Business with Paytm. Unlike any other app, the merchants could settle their payment instantly and keep track of it. This move shot its merchant base to more than seven million by March!
- As of January 2018, it was valued at $10 billion owing to the investment of $300 million by Warrant Buffett’s Berkshire Hathaway. Though, an official statement by Berkshire confirmed that Buffett wasn’t involved in the deal.
- Paytm signed up for the Umpire Partnership of the IPL for consecutive five years.
- Paytm Money was established to build investment and wealth management solutions to the users. It aimed to bring market funds and mutual funds to the Indian masses.
- Gamepind was launched in a collaboration between Paytm and Alibaba owned AG Tech Holdings Limited as India’s largest gaming and quizzing destination.
Paytm and Citibank joined hands together to launch credit cards.
Reports suggest that Yes Bank’s Rana Kapoor is in talks with Vijay Shekhar Sharma to sell his and his family’s stakes in Yes Bank worth Rs. 1,800-Rs. 2,000 crores to Paytm.
Paytm is gearing up to launch its IPO this year.
Paytm Mall Case Study
Paytm launched its B2C Paytm Mall in February 2017, which rolled the payments network as m-commerce. The users could browse through and shop the products from registered 1.4 lakh sellers.
Heavily inspired by China’s TMall, Paytm Mall has gone a step ahead to establish customers’ trust in the products and services it offers through its platform. The products have to go through quality checks at Paytm warehouses and channels. It has tied up with over forty logistics partners and has more than seventeen fulfilment centres all over India.
Paytm Payment Bank Case Study
The Paytm Payment Bank was launched in November 2017 to reach out to rural and tier-3 cities in India where banking and financial services are yet to make a mark. It would go on to serve almost half a billion Indians and make their life easy with financial services that are easy, smooth and risk-free. The bank doesn’t charge any account or minimum fee either. The registration and account opening process is happening online, and there is no paperwork. RuPay and Visa debit cards are issued to the account holders.
The founder, Vijay Shekhar Sharma, holds fifty-one per cent shares in the bank, which is operated as a separate entity. The parent company owns thirty-nine per cent and other ten per cent stakes are held by a subsidiary jointly hold by One97 and Sharma.
The then Financial Minister, Late Arun Jaitley launched the bank. Several eminent banking personalities attended the inauguration ceremony. The bank aimed to launch more than 100,000 outlets all over India however, fell miserably short of it. As of now, the bank has only 31 branches in India.
What Are the Major Sources of Paytm Revenue?
Paytm deploys eight models of revenue, which let this payment platform stay afloat and do well. These are: Interest, Advertisement and Commision.
- Interest – Paytm generates four-six per cent from an escrow account in a nationalised bank. As per RBI instructions, Paytm wallet money goes into this account on which interest is earned.
- Advertisement: Paytm sells its top banner slot and digital space on the app to various brands to earn money.
- Commission: The portal charges a nominal sum for a commission in exchange for utility payments and recharges.
- The merchant also needs to pay one per cent of commission to transfer wallet money to their bank account.
- Several banking institutions and financial service providers are associated with Paytm to promote their products in exchange for a commission fee.
- Payment Gateway Charges: Paytm has emerged as a secure, smooth and reliable payment gateway solution, for which, it charges 1.99 per cent on every transaction. RuPay cards are exempted from any transaction charge up to Rs. 10,000.
- DigitalGold: A user can buy gold worth Rs. 1 from the payment network. This gold is stored in digital form and may increase or decrease in net worth as per the market. However, Paytm’s commission stays.
- Paytm Bank: It operates like any other bank and earns revenue by selling its products.
What is Paytm Big Revenue Model?
According to the filings with the Registrar of Companies, the company reported the following figures:
- 2014-2015: Paytm showed exemplary growth and recorded revenue of 2,100 million.
- 2015-2016: Paytm’s income for this year was 3,360 million with the reported loss of 3,370 million by the end of the fiscal year.
- 2017-2018: The revenue generated by the company was Rs. 3,229 crore. The reported net loss was Rs. 1,604 crore mainly because of subsidiaries choosing to call it quits with Paytm Money.
2018-2019: The revenue increased marginally for the parent company despite fierce competition from Google Pay and PhonePe. The losses expand to 165 per cent and the standalone revenue for the fiscal year increased to Rs. 3,319 crore. However, due to a loss of revenue in its new models such as Paytm Financial services, Paytm Entertainment Services, Paytm Money for Mutual Fund, the parent company had a setback and net loss of Rs. 4,217 crore.
Acquisitions and Take Overs
Paytm acquired a fast text messaging service platform, Plustxt in the year 2013 for $3 million. Plustxt let the user chat and message in any Indian language. In 2015, the company also invested $5 million in a hyperlocal delivery partner and auto-rickshaw aggregator, Jugnoo to help in scaling up its operations and enhance its efficiency in serving Delhi-NCR.
Later on, it also acquired Shifu, a Delhi-based consumer behaviour prediction platform and local services aggregator, Near.in
To ramp up logistic operations, the payments network invested in XpressBees and LogiNext in 2016.
In the following year, it invested in a healthcare startup, QorQL – a platform that uses big data and deploys Artificial Intelligence to enhance the quality of healthcare in India.
The company also acquired a majority stake in Insider.in, an online ticketing platform for events and entertainment. It acquired Little & Nearbuy and merged them in the same year.
The company also acquired an emerging startup Cube26 in 2018.
What is Paytm Swot Analysis?
Paytm SWOT Analysis Case Study
Let’s dive in and understand the several aspects of what makes Paytm enjoy the position it is in and what are the bottlenecks it faces that are curbing its growth.
|Being the first company in its segment gives it a strategic advantage in the Indian market. Their launch coincided with the advent of smartphones, which helped them to take over the market initially.||Despite such colossal backing, the company failed to leave its mark on the international market. It couldn’t expand its base anywhere except India.|
|Using Paytm is convenient. You don’t need cash. From Rs. 2 to Rs. 10,000- you can pay it via the app in a few clicks. It is available round the clock and easy to use.||While it is a fintech company, Paytm could improve its technical prowess to fuel its growth.|
|The Paytm wallet can be integrated with other e-commerce sites easily. The customer support is available 24/7 and is responsive. As of now, it can be used to pay across more than 3 million stores, both online and offline.||It could use better product awareness in tier-3 cities, especially in rural areas for deeper penetration.|
|Along with payments, the app lets you book tickets, recharge metro card, online reservation and much more. The interesting fact is that a user doesn’t have to go through a payment gateway.||The company needs to understand users’ concerns regarding security vulnerabilities. While it deploys cutting-edge security details, it needs to talk about it more often to address concern and queries regarding using the platform.|
|The payments network has slowly yet steadily made inroads into tier-3 and rural areas as well.||Apart from the Wallet and Paytm Mall, the awareness regarding its other products Digital Gold, Paytm Bank and Paytm Money is minimal.|
|It brings various discounts, attractive cashback, deals and offers time-to-time to lure new customers. This strategy has seemed to hack into the Indian mindset that is looking for attractive prices and best-in-class value.||Indian people prefer to have liquid cash at any time. Paytm, however, works in contrast with this traditional mindset. With demonetisation and Indian Government’s constant push towards digitisation, it is expected to bid well. One of the many complaints levelled against the portal is its poor, uninformed and rude customer support.|
Comparison Case Study about Paytm
|India is a young country with many of its citizens being working professionals. They prefer to eat and shop online. Paytm could work in its direction and work on making a reliable logistic network for home delivery services.||Paytm deploys comprehensive security measures, but it is no Fort Knox. Like any other platform, it also faces growing concerns over information security. There are concerns over privacy, information security and third-party data access.|
|Paytm can capitalise on affordable smartphone segment and higher penetration of internet coupled with pocket-friendly data packs. Many people are shopping online and paying online even more. It also strengthens its role as merchant aggregators.||India is becoming digital, and each day, we see a new player entering into our world and promising to change our lives. It might translate into superior services and abundance of choices for a user, an established player like Paytm perceives it as a threat. There are already players like Google Pay, PhonePe, MobiKwik and Freecharge in the market that are offering attractive cashback and deals on every transaction. Besides, service providers like Airtel and Vodafone have also launched their online payment gateways, diluting the overall brand positioning of Paytm as a result.|
|It should focus on bringing groceries and everyday essentials to the platform to enhance repeat customer transactions.|
User Base Case Study
As per an official statement, there are more than 27million monthly active users on Paytm Inbox. Paytm overall subscriber base exceeds 177 million and more than seven lakh transactions happen on the platform every day.
Demonetisation scaled its operations to another level as it received a tremendous response from all over India. The company achieved approximately 75 million unique users per month, out of which forty per cent belonged to small cities. The 67 million user base belonged to 56 big cities and the rest from towns and rural base. It witnessed more than 1,000 per cent growth in Paytm wallet money, 300 per cent rise in-app download, and more than 20 million new users were gained within two months following demonetisation.
As of now, Paytm plans to invest Rs. 750 crore to expand its users on mobile to 250 million by March 2020.
- In the last year fiscal year, Paytm’s market share in the e-payment segment was approximately twenty-six percent.
- By 2020, the platform plans to extend its operations to the loan market and give small loans to 500 million people.
- It is also launching a WhatsApp-like chat app though with more evolved features.
- The acquisition of Shifu and Near.in allowed the network to expand its offline and online platform and enhance its customer experience.
- Paytm has formed a 5-member board committee toexpand the physical presence of its banks.
Conclusion for Paytm Case Study
There are several payment platforms like Paytm in India. However, none has managed to carve a niche for itself like this fintech unicorn. Paytm dominates the market for its comprehensive security features. The Paytm Wallet is approved by Reserve Bank of India. While demonetization singlehandedly established its dominancy in the market, its sheer ease of usage, availability in several regional languages, user-centric experience and simple interface are the contributing factors to its popularity that can’t be ruled out.
Company has good customer return Potential
Besides, the platform is also aiming to increase repeat customer transactions by bringing daily essentials like groceries and fashion products online. Paytm might be a preferred payment platform choice for in-store purchase and online payment, its initiative Paytm Mall faces fierce competition from the retail giants like Amazon India and Flipkart, which control almost eighty per cent of the online market. To push the adoption of online payments via Paytm and enable even the smallest segment in a tier-3 city to do more, it offers cashback, best deals and attractive price points.
The fintech company is ambitious, and with its two wealth management products, Gold Gifting and Paytm Gold Savings Plan, it tries to appeal the fence-sitters and their traditional sense of investment. Paytm is also the only platform to use digital advertising to its advantage like never before.
These are the primary revenue system for Paytm:
- Paytm Mall (Marketplace)
- Recharge-based Services
- Utility Bills and Ticket payments
- Payment Gateway Solutions
- Paytm Wallet
- Gold Savings Plans
- Paytm Payment Bank
- Coupon Codes / Voucher Cards
- Digital advertising
With significant and ambitious expansion plans set for the next fiscal year, how the cards unfold for Paytm will be an exciting event to witness.