How Does Paytm Make Money? The Paytm Business Model In A Nutshell

Paytm – an acronym of “Pay Through Mobile” – is an Indian financial technology and eCommerce payment company founded in 2010 by Vijay Shekhar Sharma as a recharge platform for mobile phone and satellite television customers then transitioned its mission toward bringing 500 million Indian citizens into a mainstream economy via payments, commerce, banking, investments, and other financial services. The company makes money via its The Paytm Mall (a mobile-based marketplace for the buying and selling of goods). Also, Digital Gold, a service enabling Paytm users to buy, sell, and store digital gold. Paytm Bank allows customers to pay for utility, insurance, investment, and loan products from a dedicated savings account. 

History of Paytm

Paytm – an acronym of “Pay Through Mobile” – is a financial technology and eCommerce payment company based in Uttar Pradesh, India.

It was founded in 2010 by Vijay Shekhar Sharma as a recharge platform for mobile phone and satellite television customers.

Sharma’s $2 million investment in Paytm was seen as risky at the time because of a lack of telecommunications infrastructure in India. 

However, the platform quickly gained traction. By offering 24/7 customer service, the company was able to win over consumers traditionally distrustful of digital banking services.

In 2014, the Paytm Wallet was launched and quickly integrated into Uber and the Indian railway booking system. A year later, the wallet added education fees, electricity, gas, metro recharges, and water payments.

Paytm became the first Indian payment app to reach 100 million downloads in 2017.

New features continued to be rolled out, including Paytm Gold, Paytm for Business, and mobile gaming platform Gamepind. 

Today, the Paytm company mission seeks to bring 500 million Indian citizens into a mainstream economy via payments, commerce, banking, investments, and other financial services.

As of March 2021, the platform processes over 1.2 billion monthly transactions.

Paytm revenue generation

Paytm has an interesting and diverse revenue generation strategy.

Following is a look at some of the ways the company makes money.

Paytm Mall

The Paytm Mall is a mobile-based marketplace for the buying and selling of goods.

Sellers are charged a range of fees for every sale, including:

  • Marketplace commissions – which vary according to the product or product category.
  • A payment gateway (PG) fee – or a transaction fee of 2.7%.
  • A so-called logistical charge (delivery fee) – based on the mode of shipment.
  • A fixed closing fee as per the total product price.

Paytm Wallet

Firstly, it’s important to note that the Paytm Wallet is a semi-closed wallet approved by the Reserve Bank of India (RBI).

As a payment gateway, users can send and receive money or put it toward other Paytm services.

As per RBI guidelines, customer funds sitting in a digital wallet must then be deposited into an escrow account by Paytm.

The company then collects interest on these funds in partnership with specific banking institutions.

Digital Gold

Digital Gold is a service enabling Paytm users to buy, sell, and store digital gold. Alternatively, physical gold can be delivered for an additional charge.

The company has plans to connect customers with jewelers at some point in the future.

By allowing them to convert physical gold into jewelry, Paytm will likely collect a commission fee.


The original form of revenue generation is still in operation today, enabling customers to recharge internet data and direct-to-home (DTH) television, among other things.

Here, the company collects a commission from each recharge of around 2-3%. Since Paytm processes billions of transactions each month, it can negotiate a higher commission rate than most other facilitators in this space.

Paytm Bank

Paytm Bank allows customers to pay for utility, insurance, investment, and loan products from a dedicated savings account. 

Given that Paytm Bank is not a bank in the traditional sense, it cannot loan money to users to pay for these products.

Instead, it makes money by cross-selling financial services and collecting a commission on each sale.

The company also collects fees associated with non-affiliated ATM withdrawals, balance checks, PIN change requests, and SMS alerts.

Key takeaways:

  • Paytm is an Indian financial technology company founded by Vijay Shekhar Sharma. Founded in 2011, the venture was seen as risky given a lack of infrastructure in the country and a general distrust of digital banking.
  • Paytm has a diverse revenue generation strategy. Paytm Mall is a mobile-based marketplace where sellers are charged various fees to sell items. Paytm Wallet is a digital payment gateway where the company makes money on interest sitting in user accounts.
  • Paytm also sells digital and physical gold and collects a raft of fees from its personal banking service, Paytm Bank.

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