Paytm is a subsidiary of One 97, an established diversified Indian company that has a range of offerings including top-ups, tickets, hotel booking, superstar talk, discount deals, music, video, games and etc. In this case, we will be focusing on a specific subsidiary of One97 – Paytm – a digital wallet business.

Paytm (a subsidiary of One97) is a digital wallet business with a match-making business model. It has two customer groups, the account holders (typically individual consumers) who deposit money into the e-wallet; and the merchants who accept payments made from the e-wallet. The individual account holders benefit from easy to use cash-free payment facility (the electronic wallet) which is fast and convenient, and the merchants benefit from not just a fast and easy payment system but other related services.

In order to increase the attractiveness for both customer groups, Paytm created other offerings such as wealth management for wallet deposits, value added services for merchants and other banking options . Paytm also created its own e-commerce site like the Western Ebay or Eastern TMall, which is accessible by its e-wallet customers.These new business offerings are enhancements of the matchmaking model that might have a different business model.

Paytm is competing with cash, the traditional payment method in India. It is also competing with other international payment methods that work in India such as Paypal or Alipay. Paytm’s competitive advantage is its localization and government support.

It is reported in 2019 that Paytm has a combined user base of 350 million, hands 5.5 Billion transactions a year, and the total transaction volume exceeding 50 Billion USD; and the company is benefitting from the general trend of digitalization. (thehindubusinessline.com 2019)


Paytm was founded in 2010 by Vijay Shekhar Sharma initially as a pre-paid mobile and bill recharging platform, rapidly growing as it expanded services into e-wallets, e-commerce and ticketing and bringing on big clients such as eBay and Uber (techciricle, 2015). Growth has been both organic and acquisitive, with the company recently buying Cube26 in 2018 to help improve consumer engagement and social media interactions with content. As the company has grown it has required additional external funding, raising capital from some investors such as Softbank, Alibaba and, most recently, Berkshire Hathaway (Crunchbase) which valued the company at over $10bn (bloomberg, 2018) Some of this growth capital has been enabled by the company spinning out its e-commerce business from the payments and banking company in 2016 to allow it to raise capital separately, given the different growth cycles and opportunities of the two businesses (livemint). From 2017-18 revenues in the payments business grew more than 4x while losses also expanded 1.7x as a result of greater advertising and new business costs (economictimes, 2018); the Indian digital payments industry is expected to grow to $500bn by 2020 (ibef, 2019) and $1tr by 2023 (economictimes, 2018). E-commerce also made a loss, struggling in particular as it competes with Flipkart and Amazon India which between them have over 80% market share.


Paytm has two customer groups. Individuals (consumers and some SMEs) who use Paytm to pay and merchants who receive money via Paytm. On the merchant side, given the demonetisation initiative in India the potential payments customer base is broad; the company had over 7 million installed merchants in 600 districts accepting mobile payments via QR Code across India in early 2018. On the individual user side, Paytm has 140 million (economictimes, 2019) monthly active users and about 350 million annual active users.

Payment banks in India – which Paytm operates for retail customers – are mandated by the regulator to reach small businesses and low income households (theasianbanker), however Paytm payments has pricing plans for businesses of all sizes. The company also has intentions outside of India, recently announcing a tie-up with Yahoo Japan and Softbank to enter the Japanese market where the Government aims to double the number of cashless transactions by 2025 (moneycontrol, 2018). The founder has been quoted as having ambitions on the US market as well (paymnts, 2018).

Learn more about the Matchmaking Business Model

You identify two or more customer groups and brings them together in your marketplace.

Engagement  — Value Creation Proposition

How Paytm creates value for merchants:

Value is created for companies by allowing them to receive a wide range of digital payment methods, both online and in store. As well as the more traditional methods such as debit and credit cards, this also includes more recent innovations such as QR codes, email links and text messages as well as Paytm’s own digital wallet service and competitor services such as United Payments Interface (UPI)[1]. Paytm is also able to supply the hardware required for physical in-store purchases. Additionally, Paytm’s payment services also link into its Smart Retail platform, a solutions-based business model that provides additional value in helping retailers manage and optimise payments and other important topics such as analytics, inventory and customer engagement under one system.

How Paytm creates value for individuals:

Compare to western countries, Indian people are not used to card payment. In india 95% transactions are made via cash (qz 2019). Therefore Paytm becomes appreciated by users who want to go through cashless transaction without going through the complicated process of creating a bank account.

Delivery — Value Chain

How does paytm work for merchants:

Sign up is free, and set up to receive a QR code to start receiving payments via the Paytm app and platform is nearly instant (paytm, 2016). For larger businesses further registration appears to be required. Additional point of sale hardware can then be purchased or rented for physical sales, and Smart Retail can subsequently be added.

How does Paytm work for individuals:

Sign up is also free. Unlike payment gate ways such as paypal, where the bank account and paypal account needs to be long to the same person, Paytm allows deposits into the wallet from other people’s card. Users do not need to have a bank account, he/she can simply give cash to a vendor and ask the vendor to transfer money into Paytm wallet.

Monetisation — Value Capture

While sign-up for the services is free Paytm tiers its fees based on the size of monthly transactions. For small start-ups and home businesses, there are no transaction charges for receiving unlimited funds via UPI or Paytm’s own bank as long as transactions via credit card, Paytm’s wallet and internet banking are limited to ₹50,000 per month. In this instance card and internet banking transactions are charged at 1.75% plus tax. For sole proprietor businesses unlimited UPI and Paytm’s bank transactions are charged at 1% plus tax, whereas wallet transactions are charged at the same rate but contribute to a ₹5,00,000 monthly limit with the other methods charging 1.75% plus tax. Large businesses can receive unlimited number of payments but are charged 1.75% plus tax on all transactions. For this size of business Paytm is also able to offer customised plans (paytm, 2019). Smart Retail is priced on a subscription model with better pricing the longer a retailer signs up to the service, costing from ₹ 999 monthly to ₹ 10999 annually for the point of sale system. The additional CRM system costs from ₹ 999 monthly to ₹ 9999 annually.

Digital Technology

Paytm does not consider itself as a technology firm. Technologies are deployed to solve Indian problems. So that technologies are means to an end. Therefore, the firm does not advertise their superiority of technology.



















Disclaimer — Written by Fredrick Wolfe and revised by Tong Guan under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. The information contained here should not be used for investment advice and is simply indicates the individual’s understanding of the company’s business models as of February 2020. © 2020