Paytm’s growth in India as a digital payment platform

By Anita Tomer & Indra Giri on January 20, 2017

Paytm a digital payment platform was launched in 2010 by One97 communication. It allows to transfer money into its integrated wallet by debit card, credit card and net banking. This wallet can be further used to make payments for recharge, bill payments and shopping (Unicorn 2016). In the last 6 years, it has evolved over and has become the first choice of the users among all the existing payment platforms in India.

It started by allowing the recharges for mobile phones, but soon it started providing payment options for other utilities such as metro card, Direct To Home (DTH), data cards, electricity and water bills, flight and bus tickets. Additionally, it gives advantage of buying goods from its e-retail platform. After capturing the e-commerce market it has also jumped into M-commerce too which allow small business owners to list their products on its website.

Focused on making the transactions more secure

Though there are various online payment platforms which give almost same facilities. However Paytm has dominated the market with its high security features and quick user interface. In context of security, Paytm is Reserve Bank of India (RBI) approved wallet which signifies that the money put in the wallet is protected under Escrow account with a reputed bank.

Furthermore, it uses verisign-certified 128-bit encryption technology. This implies that the secret key used in transaction or the length of the password cannot be revealed (Paytm 2016). To make the transactions, above than 1 lakh more secure, it has tied up with India stack too. To ensure great scalability for its online and offline payments, it has been authorized to implement India stack’s components like esign and eKYC for identification and authentication (IndiaStack 2016).

It has focused in building a system robust as well as secure. To build a robust system Paytm has increased its sever capacity almost twice. Now it can handle at least 5,000 transaction per second (Bhalla & Krishna 2016). It has also announced to start point-of-scale capabilities to the app. This will allow the user to rely on the merchant’s smartphone by entering their card details to make a payment.

High growth after demonetization

Paytm has focused towards building its brand image more concrete in the running competition. Recently it has appeared to be ahead of its rivals mobikwik, freecharge and others. As per the records, it was found that currently around 177 million of the users use Paytm in their day to day life and make a total of 7 million transactions in a day (Joshi 2017). After demonetization, it has achieved a total of 75 million unique users per month. Among all users around 40% users belong to small cities, 67 million population belong to 56 big cities and the rest from small towns. In Dec 2016, information about total number of users, unique visitors and others things has been mentioned in the list given below.

Total users 177millions
Product E wallets
Service online payment/ offline payment
Merchant enroll  8 lakhs
Monthly unique visitors 75 millions
Daily transactions 7 million
Employees 4,500

After demonetization paytm made it easier to pay with its digital payment option. There was  around 1000% growth in the money added to its wallet, 300% rise in app download and a gain of 20 million new users was recorded within 2 months (BI intelligence 2016).

Major source of revenue

Paytm’s revenues are generated from multiple sources. This includes:

  • Interest (ranging 4-6%) received from escrow account maintained in a nationalised bank,
  • Advertisements on its websites,
  • Commission from utility payments and recharges,
  • Commission of 1% for transferring money from merchant e-wallets to their bank accounts (Gupta 2016).

The total revenue during 2015-16 was 3360 million which was higher than 2100 million in the previous year. However in 2015-16 it showed a loss of 3370 million.

Major investors in Paytm

The major investors in Paytm includes:

  • Ant financial known as Alipay,
  • Alibaba groups,
  • SAIF partners,
  • Silicon Valley Bank and
  • Sapphire venture (Bailay & Chakravarty 2015).

In March 2015, Paytm received an investment of US$ 575 million from Alibaba group a famous chienese e-commerce company. Similarly Indian industrialist Ratan Tata too made a huge personal investment in it. Furthermore, paytm has also started working on Alibaba’s financial services model which helps sellers and consumers to borrow small loans on their debit cards from the ecommerce firm.

Market reach and future investments

Paytm is planning to disburse small loans to 500 million of the population by 2020 in its marketplace. It has been also seen that last year it has captured 26% of all the e-payment industry. Other major contributors were debit or credit card at 40%, National Electronic Fund Transfer (NEFT) at 25% and Unified payment interface (UPI) at 9%  (Gupta 2016).

Increasing number of users of Paytm
Number of users of Paytm

Shifu known for consumer behavior prediction platform and have been acquired by Paytm in 2016. Whereas, Shifu has been acquired to enhance consumer experience on its platform (Mishra 2016). On the other hand has been undertaken to strengthen up its online to offline platform (Gooptu 2015).

For the coming year it has planned to add some new features and services, to have around 5 million merchants to make and accept digital payment in its platform. It is also planning to make the sales and distribution companies to integrate in i.


  • Bailay, R. & Chakravarty, C., 2015. Paytm to disburse small loans to 500 million Indians by 2020. The Economics Times.
  • Bhalla, T. & Krishna, V., 2016. Has Vijay Shekhar Sharma’s Paytm bitten off more than it can chew. Your story.
  • BI intelligence, 2016. Paytm wants 5 million digital merchants – Business Insider. Business insider.
  • Gooptu, B., 2015. Paytm acquires to strengthen its presence in online-to-offline space. The economics Times.
  • Gupta, H., 2016. Digital payments see robust growth in 2016. The Financial Express.
  • IndiaStack, 2016. how paytm is using Aadhaar ekyc to upgrade. IndiaStack.
  • Joshi, A., 2017. Paytm Records 1 Billion Transactions & 147M Wallet Users in 2016!
  • Mishra, D., 2016. Paytm acquires Shifu in a deal worth $8 million. Et Tech.
  • paytm, 2016. Know more about your Wallet: Security Features, Various Fees, Refunds. paytm.
  • Unicorn, 2016. Paytm Business Model & How does it Make Money. Unicornomy.


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