Learn How Paytm Business Model works

It is mind boggling how Paytm affords to pay so much money in cashbacks to their clients. For a company to sustain itself, they need to make profits.

So, how does Paytm business model make profit so that the company is afloat and growing? We dive into the gritty details to learn about the cogs responsible for the business model of Paytm.

Paytm Business Model: what is it?

Paytm started out in India and it has now become a pioneer of what is known as the marketplace and virtual bank model. In 2010, it was inaugurated as a recharge application but it has since evolved to give numerous services similar to what a bank offers. You can pay bills, recharge prepaid mobile accounts, use marketplace etc. It also works as an e-wallet to its users. Currently, it has around 100 million customers all around the world.

Which business model do they use?

Paytm is an amalgamation of marketplace and payment model. It acts as a virtual bank by allowing the users to pay their bills and recharge their accounts.  Moreover, the e-wallet combined with booking options allow you to book different commodities.

Paytm Business Model: How do they make profit?

Paytm Business Model
Booking on Paytm

Paytm as of May 2017 is valued at $7 billion. Alibaba has a major stake in the company. Alibaba is a major player in the marketplace model.

Learn about Snapchat’s revenue model as well.

Paytm business model makes revenue through different means. It can be categorized in the following ways:

  1. Paytm Mall
  2. Payment of Bills
  3. Recharge Service
  4. Paytm Wallet
  5. Digital Gold
  6. Paytm Bank
  7. Payment Solutions

Paytm Mall

Paytm business model

Paytm was the first company in India to introduce to the only virtual marketplace. As of now, they cater to more than 120 million customers and 2 million daily transactions.

The marketplace is profitable for the sellers. The revenue is generated from the commissions and fees of the sellers on the marketplace.

Payment of Bills

The e-wallet service allow you to pay all your utility bills. Doesn’t matter if it is your electricity or broadband bill, you can pay all of them. Paytm acts like a virtual bank and makes it easier to pay bills. You no longer have to go to banks or service centers to pay bills. Furthermore, affiliated educational and financial institutions mean that you can pay their dues through this service as well. Paytm makes money by charging commissions from the affiliated companies.

Recharge Services

For what started as a mobile top up application, Paytm has gone through an evolution over the course of years. They now allow you to recharge different subscriptions. TV and mobile subscriptions can be recharged through Paytm. Also, metro card and other similar cards can be topped up through this service.

Paytm Business Model: Wallet

Paytm is famous for providing cashbacks to its customers that are worth up to 100%. You may wonder how Paytm makes any money when they offer so much in cashbacks. There is a caveat to this offer. The Paytm account does not let you withdraw the cash from your e-wallet. All the cashback is stored in your wallet and you can use it to pay for things from your Paytm app.

The Paytm wallet works to convert the currency into a digital form that makes for easier transactions. Moreover, the wallet makes it easy to carry money everywhere. Your money is safe from external theft and it does not matter if you forget your wallet at home. The Paytm wallet is on the cloud and you can use it from anywhere with your mobile device.

The money added in the e-wallet is then moved to an escrow account setup by Paytm with an affiliated bank. This escrow account helps Paytm to get interest on the deposited amount. This interest rate depends on the settled rate between Paytm and the bank.

So, the amount of money deposited by registered users determines the amount of money Paytm makes. This is just one of the ways how Paytm generates revenue.

Digital Gold

This category shows that Paytm has done good market research before expanding their business. Gold is one of the safest investments that can be made in India. To help their customers to acquire gold, Paytm got in partnership with MMTC-PAMP, a gold refining company.  This allows the users to buy ‘Digital Gold’.

You can use the digital gold for buying, selling, and storing it. Furthermore, the gold can be received in physical form by paying a delivery fees. The Paytm account allows you to use the digital gold to pay bills and buy things from the Paytm Mall.

Paytm Bank

Paytm is a payments bank as well. Payment banks are digital banks that can allow their customers to deposits money and provide interests on the deposited money. However, they cannot give loans to their customers. Theses bank services are virtually tendered through the Paytm app and website.

The Paytm app available on smartphones can be used to avail these services. Moreover, you can also issue a debit card from Paytm that you can use at numerous locations.

The Paytm bank allows you to open a current digital account with nil deposit. Furthermore, you can also open a savings account. You can get 4% interest per annum on the deposited amount in your savings account.

If the value of the deposit in the savings account is over 1 lakh Indian Rupees, then the money is moved to a fixed savings account in a partner bank which yields 7% interest per annum.

Selling products of others

Paytm sells products such as insurance, investments etc. of different companies. They make commission over the sales they make.


It must be clear to you now that most of the revenue generated by Paytm comes from commissions and fees that they charge their customers and affiliated companies. Moreover, interest from escrow accounts also help in the generation of revenue. Their business model has proven to be very successful and their current valuation is evident of its success.  

Leave A Comment