PayTM Business Model & Revenue Model Analysis

PayTM Business Model & How does PayTM Make Money

PayTM Business Model & Revenue Model Analysis

PayTM is one of those companies which have evolved over a relatively short span of time and oh boy have they evolved good.  They came in from payment gateway to e-commerce to wallet and god knows what all.  Post which they have conquered it thanks to the enormous amount of VC funding that they have received.  Let’s find out more about their various revenue lines and allied business activities to find out more about PayTM Business Model.

About PayTM, Facts, Founders, Funders & Funding

Total Funding received by PayTM: Appx 1.5 Billion USD. (as of Janurary 2016, Excluding the Credit of Working Capital Loan from ICICI Bank of 300 Cr).

PayTM Founder: Founded in 2000 by Vijay Shekhar Sharma (VSS as he is called in the circle). PayTM is owned by One97 Communications Ltd.

Valuation of PayTM: as of Jan 2016 Appx 4 Billion USD.

Funds that have invested in PayTM include those of the Likes of Alibaba of China (via its Ant Financial Holdings Entity).

PayTM Business Model & How does PayTM work

Following is the total coverage of the topic on PayTM Business Model and How does PayTM work, we will include the direct and indirect revenue lines used by One97 (its parent company).  While it is important to note while reading this is that PayTM is not your traditional E-Commerce cum Payment Gateway player, it is a full fledged Payments Bank Company (they are one of the receivers of the Payments Bank License issued by RBI).  The various revenue lines that they have can be broadly classified into the following sub-categories:

  1. (Web E-Commerce, App-Commerce etc)
  2. Payments & Wallet Integration & TDR (Transaction Discounting Rate)
  3. Seller Services
  4. Payments Bank (Yet to Launch as of the date of writing this Analysis)

To Start with let’s see how PayTM Makes Money from sale of goods on their platform.

How Does PayTM work (Shopping) : PayTM (You have to search for the product in the search bar to shop for any physical product as they are focusing more on their Payments Vertical so they have changed entire landing page to payment processing) an e-commerce portal, B2C shopping Portal, for at-the-moment, customers ordering goods for deliveries in some parts of India.  The base model here is a MarketPlace : List Sellers for selling their products > Get shoppers browsing through the product categories > Dole out discounts to shoppers in the name of customer acquisition > Customer buys the desired products > Seller has to ship the product to the customer > Product once Accepted & Not returned back until the timeline for returning is over > Seller gets his agreed price of the product minus the commission charged by PayTM for generating a customer.  Thus the crux of the Model is “X% commission on the total sale value given to the seller for a particular product”

This sale can happen via any channel as given and approved by PayTM listed below & For all the orders sold by PayTM for every seller on their platform PayTM will charge a percentage (%) cut on the total sale amount pre-tax.

  1. Sale via Website
  2. Sale via Mobile Website
  3. Sale via Mobile App (Android or iOS or others)
  4. Sale Via Affiliate networks (Bloggers, Coupon Websites, Review Websites etc)

The percentage of commission that PayTM charges varies on the category of product that PayTM is able to sell.  It ranges anywhere between 0% to 20% of the sale value (excluding taxes and discounts).  The following image will show you how the receipts of PayTM will look like once the sale is recorded in PayTM’s books of accounts:

E.g. Customers A, B & C Purchase 5 Products from PayTM which are a Book, a Stereo, A Fridge, A Mobile Phone and a Bed sheet from 3 Sellers.  Total Payout by PayTM and Receipts look like as they do in the below table (Click to Expand):

How PayTM Works

The total of Col I (4315.00 INR) is the total revenue of PayTM from sale of goods.  This is one of the basic revenue models for PayTM.  There are other Revenue Lines as well that PayTM has.  These are outlined and explained in details below.

You may also be Interested in Reading: How does FlipKart Make Money

Business Model of PayTM (Company One97 as a Whole)

  1. Web Portal (E-Commerce : Already Explained above so will not get into the depth of this model again)
  2. Listing Fee and Convenience Fee (Sellers are charged listing fee for selling on PayTM and onboarding fee for doorstep service of explaining everything related to selling online – pretty self explanatory so won’t nose dive into this either.
  3. OTA Bookings: PayTM recently ventured into Online Travel Agency Model (OTA) where it is providing air, bus etc ticketing and hotel booking services (the model here is again commissions similar to e-commerce model highlighted above)
  4. Payments Integration: You can now use your PayTM wallet to pay all sorts of utility bills including cable, internet, mobile, gas, electricity etc.
  5. Mobile Wallet: Integrating its wallet across major e-commerce and e-payment enabled online sellers (replaces a traditional payment gateway with the exact same business model but lower fee and Transaction Discounting Rates (TDR) ).

How does PayTM Work with Payments Integrations

This is pretty similar to the way a Mobile Recharge guy along the corner of the street of your house works!  He makes sure he is present there when you need a recharge, and gets 2-4% commission on the recharges that he makes to your number.  Same is the case here – PayTM provides an alternative to the street corner based guy who does your recharges and since the bargaining power of PayTM is higher as compared to that poor chap (because of large number of transactions) PayTM ends up getting higher commission from these vendors.

PayTM does recharges and bill payments for DTH, Internet, Prepaid Phones, PostPaid Phones, Insurance Premium Payments, Loan EMI Payments, Delhi Jal Board Payments, Delhi Metro Payments and many such more.  While Government entities may not entertain commissions to PayTM they surely hook the customer to PayTM’s wallet for other payments including this one because PayTM gives CashBack on all of these in the form of Wallet Cash which can only be redeemed against any payment made via its network and can’t be withdrawn into one’s bank account.

It is important to note here that PayTM negotiates hard on the Settlement time to these vendors i.e. there is a time lag in which you pay PayTM and PayTM pays the Vendor.  Assume Your Due date for payment of Light Bill is 1st of the Month – You pay it by that date, PayTM will release the same money to the vendor by say 8th of the Month (Your Electricity will not be disconnected because PayTM has given confirmation to the vendor that the payment has been settled) and thus PayTM in turn will make money out of the interest that it earns out of the lying deposits in the wallet.

PayTM Business Model with Wallet based Payments

PayTM integrates its Wallet at most places where other companies integrate their payment gateway infrastructures.  It works in the exact same way as that of payment gateways i.e. by discounting the value of the transaction by 1-3% and giving the rest to the merchant.

Interesting to Read this as well:  How Payment Gateways Make Money!

Interesting to Read this as well:  How Venmo Makes Money!

I hope you have enjoyed the post on PayTM Business Model, if there are any questions wrt the business model of PayTM I will be happy to answer them, please post your questions in the comments section below.

Disclaimer: The analysis of the PayTM Business Model or How does PayTM Make Money is of the Author’s himself, neither the company (PayTM) nor its affiliates have confirmed the same to the author and the descriptions, stats, facts and figures are either obtained through secondary web research or interrogation of the users / sellers or other resources on the web. Please use your own discretion to use this info when required and by continuing to read you agree to indemnify the author from all liability arising out of using this info on your own.


  1. Currently we run campus ambassador program in 560+ colleges in India where students apply to various enterprising programs in campus & refers other students. Today we have 1.26 L students in our platform. Currently we reward the most active students with public recognition. Is there a way we can give the Paytm points in their wallet in exchange our points ?
    If we are bringing active students who are ambassadors & also spends a lot in activities , Paytm will benefit from the acquisition of this students

    What is the working arrangement we can have with Paytm ?

    1. You can work with them on a cash against points basis, whatever cash you want to give to the students, equivalent or proportionate amount of money needs to be given to paytm for that.
      Why do you need that BTW? You yourself can create their Paytm ids and transfer money via net banking, no need to contact paytm in between 🙂

    2. Hello Rajiv,

      Can you please contact me on the below number. My name is Padmesh and I am working on something similar to campus ambassador program and need your help and inputs.

  2. Hi

    Why would utility service providers (DTH, electricity etc) have association with a company like paytm? Why would they choose to spend 2-4% while they can get payments directly?


    1. They would do so to get more distribution channels to their network, and to a company of that size the payment gateways do not dare to charge this high. They typically charge as low as 0.5% and that amount is ridiculously low for these companies to add a distribution channel. Plus funded companies like PayTM dont even charge couple of providers for just getting associated with them.

  3. Hi, would like to know how PAYTM would work with an online merchant (entertainment) who facilitates payments to its product/service through PAYTM wallet service and rewards it’s customers by PAYTM wallet balance.

    Also, do let us know how viable it will be for the online merchant to rely on PAYTM user’s community using wallet service to aid it’s revenue model if they have to make it an exclusive payment wallet service provider & gain discounts on commissions on transactions.

      1. It has been told that if person ‘A’ pays his electricity bill on 1st of the month n Paytm pays that amount to the vendor on 8th of the month (confirmation about the payment is given by Paytm to vendor beforehand), then Paytm makes money out of the interest it earns from the amount lying in the Paytm Wallet..

        Hw does Paytm earn an interest from the amount lying in Customer’s Paytm Wallet?

        Won’t it b like… Instead Paytm will pay interest to the vendor for keeping its money for 7 days.

          1. Yes, But DTH has to continue the service for the user for 7 days, thus they will claim that PayTM kept their money for 7 days, so here ,PayTM should pay the interest to DTH right ?

            since PayTM kept DTH’s customer’s money in their company for 7 days.

          2. This is Contract Based, Paytm has agreed to pay on behalf of the users that use its platfrom to recharge DTH. So no scope of not paying to the DTH operator

  4. Hello There. I found your blog using msn. This is an extremely well written article. I will be sure to bookmark it and return to read more of your useful info. Thanks for the post. I will definitely comeback.

  5. I starting my business with paytm.I want my customer pay a bill for using paytm.So,what can i do.Please tell me ideas.

  6. When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get four e-mails with the same comment. Is there any way you can remove people from that service? Bless you!

  7. Wow! Thank you! I continually needed to write on my website something like that. Can I implement a portion of your post to my blog?

    1. Nice follow up reply. Even though the question is quiet easy, we can just the answer by goggling.

  8. can you please tell me how banks provide instant or differed cash back for online shopping like flipkart and amazone recently given huge cash back to use particular banks card

  9. What kind of legal compliance that one need to comply with if one want to start a same business model as that of PAYTM.
    Please help me out waiting for your kind response

  10. How do sites like “Paytm” manage to present us with cashback, how does that entire process work. On what basis or calculations are the cashback amounts decided, please revert back!
    Thank you.

  11. The model is very simple, they must be making money hands over fist. But there must be some dark side to it aswell , maybe?

      1. Hi, I’m looking to set up a similar business model with a slight twist, would you be able to share the best steps you’d recommend? It would be great to discuss this further over email. Thanks!

      1. Can you please tell me what legal documents are required for starting a business model paytm? What are the step? From where m i supposed to start?

  12. Hi there , very interesting article , may I know what it takes to start a business like PayTM , can you kindly email me the details, Thanks in advance!

  13. Very helpful article; can you please email me the steps and precautions should be taken while doing a re seller business with payment gateway or with wallet companies. Is it worth for a startup company with very less funds available to start doing something by its own rather than work as a re seller?

    1. Did not get your question Man.. Can you clarify?
      What I understood is you will sell your goods and services using wallet and payment gateway – if that is correct, yes it is completely safe to use a payment gateway or a wallet to get funds from customer – it gives a safety feature for the buyer to get money back in case of fraudulent sellers. At UE I also use Intermediaries.

  14. What it takes to start a business like PayTM? In India for a software start-ups; is it worth to start our own payment gateway/ wallet company with very less funds available rather than working as a re seller of existing one?

    1. There is nothing called a RESELLER here.. Either you use an existing wallet / payment gateway or you build your own. Totally depends on your business activity. Your first line asks on how to start a business like paytm – So I think you want to build a business like PayTm or thinking of selling paytms services for a fee (the latter my friend does not happen). For more details pls take this offline and email me.

  15. Please send above mentioned doc set to me too . My PPI website for recharge is ready , want to add wallet and fee payments before commercial launch. May your guidance help us optimally.

  16. Thanks for the article. Paytm started to become more popular when they were signed-up with Uber (post RBI pulling-up taxi hailing apps for violating 2F authentication required for credit card debits). My question is currently I see a lot of promotions done on Uber by Paytm (25% off for 5 rides) – are these promos funded by Paytm or by Uber or both?


  18. hi ,
    I must say, it’s really a well-written article.

    Can you please send me , what are the steps a one should follow to start a business like paytm.


  19. Sir,
    I want to work in PAYTM KYC PROJECT. So Please information me how do work in PAYTM KYC PART TIME OR FULL TIME and how do work other peoples .

  20. interesting article , may I know what it takes to start a business like PayTM , can you kindly email me the details, Thanks in advance

    1. At a starring what would be cost
      I want to start up this business
      I am not computer background
      What type of model should use
      What should be in model
      Main cost

  21. Hi ,
    I must say, it’s really a well-written article.
    Can you please send me , what are the steps a one should follow to start a business like paytm.

  22. Hello Unicorn Economy ,

    I read your article , it is very useful and really appreciate your analysis.
    I want to some information if you can help me it would be great.

    1. If any one want to start business like Paytm ,What is process ?
    2. For wallet system what is the process which needs to be follow ?
    3. If any one want to develop own payment getaway , What is Process ?

  23. I Don`t buy these points , because of below reasons :-

    1) How can any vendor offer you a marginal cashback on every purchase you do and on top of that it has same rupee value unlike other portals which are confined to some percent usage.
    2) what huge interest would you earn from your lying capital for mere 7 days.
    3) They are not charging even a single rupee as brokerage on there wallet services.

    Request you to please reply me on my email.

    1. All of your questions would have made sense, if paytm was actually to make money – It doesn’t and that is the reason what analysis I have given above is just the way of saving some face in front of investors to show that if people are addicted to the service we can make money by overcharging them (brokerage) and undercutting vendors (charging commission).

  24. How much a person pays for using paytm for day to day needs. In other words what paytm chRges for service provided.

  25. Hi there , very interesting and a well thought article , may I know what it takes to start a business like PayTM precisely the mobile wallet one , can you kindly email me the details, Thanks in advance!
    what legal documents required for starting a mobile wallet like Patym ?and the kind of precautions to take for the same , and the growth opportunity for the same in india.

  26. Hello !
    Very Nice Article self explanatory .
    We are planning to setup business like PayTM.
    It will be very helpful for us if you can send the details . Thanks

  27. How does Paytm make money on P2P transfers? Is it only when that money is spent through the wallet or transferred to a bank account?

  28. Hello, I have gone through many articles but this is one of the most precise and appreciable i have gone through. Well i have planned to start a business like paytm, but our company is interested in transaction between B2B portfolio. A gateway for business transactions. Transactions in the market between business persons and not for C2B or B2C. So may I know what it takes to start a business like PayTM, can you kindly email me the details, Thanks in advance!
    what legal documents required for starting a mobile wallet like Patym ?and the kind of precautions to take for the same , and the growth opportunity for the same in India. I also have gone through PPI license link. Can u provide in depth detail for that too?

  29. Hi, Do you have any information about how paytm Add a new category i.e. their whole value chain like Seller selection, Demand forecasting, logistics, promotion etc.

  30. Hiii Unicorn
    Above information about Paytm is truly great……I am making a ppt on this kind of service provider companies so would u like to send information about the doc & other steps to start this kind of business. I read anywhere that there are parent companies who provides fund to this service providers (e.g. Telco provides fund to Freecharge) is it true??? Then how much funds any service provider like freecharge needs to start businesss
    Waiting 4 u r reply…..

  31. Can you please clarify if your statement “and thus PayTM in turn will make money out of the interest that it earns out of the lying deposits in the wallet” is factually correct? I understand that all amounts credited by a PayTM wallet holder is deposited into a non-interest bearing escrow account. This is provided for under the PPI Regulations by RBI.

  32. Hi,

    Can you please provide few backlinks from your website to my website.I will give you the credit and will guide the visitors on my website to your.

  33. What kind of legal compliance that one need to comply with if one want to start a same business model as that of PAYTM.
    Please help me out waiting for your kind response

  34. 1. If any one want to start business like Paytm ,What is process ?
    2. For wallet system what is the process which needs to be follow ?
    3. If any one want to develop own payment getaway , What is Process ?

  35. If paytm is offering cashbacks for every mobile networks then why are they not giving any cashbacks for Airtel customers?

  36. I have a regarding the cash backs. Is it a income or expense? How they treat the cash back given to customers in their books of accounts??

  37. Sir, If there is zero interest on money by a bank. So who will this kind of business work that successfully. How can a company earn in this way if bank is not providing interests on current account.

    for E.g. : I want to start this kind of business in a country where bank don’t pay interest on current account, So what can i do for this now. how can i earn from this type of a business. Because as i see Paytm is getting more income from its bank deposit interest and after comes the commission.

    Please help me out waiting for a kind resopnse. Thankyou

  38. respectead sir,
    I am intrestead in the paytm distributersheep. I am doing alredy telecome business. now paytm is fast groth and best futere this business and grow this business. give me chance become the your channel partner.
    hirai traders
    cont 8308585535

  39. Hi This is Rahul and thank you for your knowledge about the basic model but i just wanted to know that, can you describe the money making procedure of e-wallets from airlines industry.
    how do they make commission from booking the tickets online of airlines in brief.
    thank you

    1. PayTM has a convenience fee model + marketplace listing of ClearTrip. Otherwise only convenience fee and blocking seats (high price sale) on high intensity sectors is the only revenue model here.

  40. @Unicorn Economy,

    Hi there, love to see that you are replying to our queries.
    I am working on venture (Startup), where my CAC is too high.
    I had a meeting with an investor, he gave me the example of Paytm.

    He said -” Typically i am not a user of paytm but recently i went to buy an I-phone for my daughter, at the time of payment the cashier said -“Sir you can get 10,000 rs as a cashback if you can pay through Paytm”, so i just instal Paytm, got my cashback and un-installed it.

    So how paytm is dealing with those customers?

    How did Paytm recover those losses?

    Please let me know!

    1. Your investor was just another chu**ya investor who just gives gyan. Ask that crap-bag how did he use the cash back that he received. Paytm cashback can only be used to transact on paytm and can not be sent to account. You can bypass this by sending this to some one else and he transferring in his bank account at 2% charges. Absolute stupid! In any model cashback or loyalty amount is used to retain the customer and get them to keep coming back. Email me for a detailed chat on this. (Chargeable)

  41. Very good article, Can I get the details of it like legal prerequisites & others. I am waiting for your reply. Thanks.

  42. @unicornomy thank you for this article, found it really insightful. I’d be interested to understand how PayTm establish how much commission they will charge per item/offer?

    1. Just realised I did a typo on my email address 🙂

      I would really appreciate if you could send me some details on the above and how to setup an ewallet business.


  43. what is the revenue model of PAYTM for selling cars and bikes on its platform and how does paytm manage to give heavy cashbacks on 2 wheeler purchase. What benefits does two wheeler companies get on Paytm platform as compared with selling directly with the dealers. Lastly what does dealer get out of this whole process???

    1. The margin that paytm gets is far less as compared to the dealers because two wheeler companies can’t rely on paytm to give things like test ride and feel of the car or bike. So when ever you book any car or bike on paytm, you need to collect it frm the nearest dealer of your house. Paytm is funding the cash back like every other cash back from their own pocket – no rocket science.

  44. It’s really a nice and helpful piece of info. I’m glad that you shared this useful information with us. Please keep us informed like this. Thanks for sharing.

Leave a Comment

Your email address will not be published. Required fields are marked *