Paytm’s 8 GENIUS Money-Making Streams | How Paytm Makes Money | Paytm Model Explained

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Paytm is everywhere today. It is a popular free app used for UPI transactions, bill payments/collection, and much more. Despite being a free app, Paytm makes a lot of money every year. If UPI is free and Paytm App is also free, then how does Paytm make so much money on a regular basis? In this video, I have tried to answer this question. First of all, in FY2023 Paytm made 7990 Crores in revenue. Let’s discuss the 8-9 Revenue channels through which Paytm was able to earn this huge revenue. Starting with a simple example, if Keshav goes to a grocery store and pays ₹213 using his Paytm App, he may think that since this app is not charging him anything, it’s great. But during this first transaction itself, Keshav may notice that there is a sound box.

Paytm Sound Box is very useful for Indian grocery store owners. It tells them if a payment has been received or not. And for this sound box, Paytm charges a subscription fee of ₹125/month. Since there are over 69,00,000 such sound boxes across India, if we do the math then this comes to 1000 Crore of revenues. This was possible because Paytm solved a huge problem. For all the small shop owners, sometimes it becomes very difficult to understand if the Payment has actually been made or not. There were many fake apps as well that said the payment had been made but in reality, it meant loss of the grocery store owner. The second way this transaction is making money for Paytm is through payment commissions.

This amount varies on the number of transactions and the total transaction amount but Paytm is surely charging these vendors some commission on payments done through its platform. The third way Paytm makes money is through merchant loans. Paytm has a lot of data about the transactions happening at a particular merchant store. This helps them decide which merchant is worthy of a loan vs. not. Because Paytm is able to give loans to the right merchants. 80% of the loans that Paytm is giving are going to people with these sound boxes. Previously it was a hassle for these Kirana store owners to get loans. There are banks tied up with Paytm now that disburse their loans by using the data collected by Paytm and pay a fee to Paytm for the same.

The fourth revenue channel from the merchants is when a customer buys something from an E-Commerce website. E-commerce websites like Amazon and Paytm have to pay a commission to Paytm to enable that payment gateway. The next one is advertisements. There are multiple advertisements on the Paytm home screen. Brands pay Paytm to display ads from them in order to increase their brand awareness. Paytm Postpaid gives you the option of making a payment now through Paytm and paying for the same later on. For this Paytm charges a convenience fee of 1% and also if you get late to repay this amount you have to pay a late fee of ₹75. The next on the list are personal loans With the same mechanism for deciding who to give loans to as the merchant loans, Paytm decides which individuals are more worthy of giving out a loan to.

This is how Paytm gives pre-approved loans to the right people. The last is commissions on bill payments. Earlier the recharge or any other bill payment was completely free on Paytm. But now Paytm is charging a commission fee. The platform fee charged by Paytm on every transaction also helps Paytm to make money considering the number of transactions made on Paytm every year or on a daily basis.

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Chapters

0:00 - Intro
0:19 - Example
0:44 - #1 - Sound Box Fee
1:39 - #2 - Payment Commission
2:08 - #3 - Merchant Loans
3:20 - #4 - E-commerce Comissions
3:42 - #5 - Advertisements
3:59 - #6 - Postpaid Services
4:38 - #7 - Personal Loans
5:09 - #5 - Bill Payment Commissions
5:47 - Conclusion
6:18 - Outro

[intellectfactory]

Paytm Soundbox should be taught as a prime example of Product Design according to customer needs.

[SudheerKumar-yvls]

You have covered the major products. And there are many more Product lines like Vouchers, credit card payment, wallet, Paytm bank, gold, Insurance, etc.

[mittalanant]

Didn't thought this much... Thanks for enhancing knowledge base

[aayushverma]

Really insightful Pawan, thanks for making such short and crisp videos!

[brajeshpatel]

Great value videos....i suddenly came across your videos... really love the content u are providing ❤

[aaryasoni]

Very well explained. Thanks for sharing.

[ArsidAkhila]

Thankyou so much for clearly explaning it.. this will help me in my project

[PiyushGupta-tmhm]

They also earn by giving vouchers of various brands on their platform to users and charging commissions from the merchants for used vouchers. I'm not sure of how big that revenue channel is but I've seen users using those vouchers too as it gives them some benefit on using those vouchers.

[educare]

After watching the video i became more bullish on Thanks

[deepakshivakumar]

How about the convenience fees paid on booking tickets for cinema/train and flight tickets etc.

[prahaladsuresh]

I've always wondered how PayTM makes money out of Metro tickets in big cities.
As per my understanding PayTM cannot really negotiate with Metro operators as they can simply switch ticket providers and this might reduce some user traffic for PayTM. I might be wrong here. They might be charging the Metro operators some convenience fee.
How do they actually make money from this?

[sunilkumarmt]

Paytm charges rental only for the sound box, I don't think there is any commission charged on the payments made through QR code scanning(amount goes directly to the bank account)?

[soumodip_majumdar]

PayTM is also earning commission from selling digital goods (movie/event/travel tickets) & also earning insurance/cancelation fees on them...

[Anilesh_MyHappinessMyWay]

Do they take Store's permission to use their data? No I suppose

[kamleshmunda]

Paytm also made money by hyping up the stocks and selling in the public markets. 😀