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Super-App: Paytm - A group of synergistic fintech platforms

Paytm is looking for an ambitious $3 billion public offering, the biggest IPO in India’s history, valuing the Noida-headquartered company at $25-30 billion. Paytm was valued at about $16 billion during its previous major round of funding in late 2019.

Paytm started as a digital wallet-based platform focused on mobile SIM top-ups and utility payments in 2010. Yet, in the last 4 years, Paytm has evolved into a comprehensive payments ecosystem. The digital wallet has evolved into a payments super-app. Paytm's business model is now a group of synergistic payments and fintech platforms. The Paytm ecosystem covers payments (wallet/ UPI), merchant acquiring, credit, savings, wealth management, and insurance.

Paytm and its holding company, One97 is now over twenty years old. But it has shifted direction many times – from phone services to marketing to mobile phone top-ups to payments to e-commerce to full-scale financial services ecosystem.

Journey :

In those days, before smartphones, if you wanted to find out the latest cricket score while on the move you could call a number – 197 – and the mobile operator would keep you updated. One97 provided operators with the content. As well as text-based content, One97 also offered music – by calling the same number you could stream a song through your mobile phone.

Soon, telecom operators began doing this work for themselves and One97 was squeezed out of the market. So in 2010, At the time, most mobile phone users prepaid for phone usage by paying cash at a local store. One97 launched a service – Paytm (“Pay Through Mobile”) – which allowed them to pay online instead.

In 2011, it added the ability to pay for digital satellite services. Then it added bus tickets and utility payments. In all cases, these were high frequency, low-value transactions were paying via mobile phone became a more efficient alternative to cash.

In 2014, According to a statement by Paytm, “We stand for payments. But an independent payments business is an orphan business, without a marketplace to anchor it. It’s like the symbiotic relationship between a rocket (payments) and a launcher (marketplace). Our marketplace allows us to build relationships with merchants… We went to all the existing marketplaces to deploy our wallet. Seeing their disinterest, we decided we had to make a call to build our marketplace ourselves.”

By mid-2016, there were around 140 million wallets on the platform, up from 40 million at the beginning of 2015. Meanwhile, mobile top-ups contributed a shrinking share of the business. By the third quarter of 2016, payment volume on Uber alone was about a third the size of mobile top-ups. Paytm built a dedicated salesforce and used a network of agents who were trained to help onboard merchants in return for a commission; a call center was also available to service self-directed merchants. By the end of 2016, Paytm had around 1.5 million merchants signed up.

In November 2016, Paytm got a huge boost via government intervention. On 8 November 2016, the Government of India announced the demonetization of all Rs500 and Rs1,000 banknotes to curb the shadow economy. Around 80% of paper money was taken out of circulation, leading to prolonged cash shortages. Demand for non-cash payment mechanisms like Paytm’s digital wallet ballooned. In the weeks that followed, Paytm acquired 20 million new users, taking its user count to 180 million.

In 2016, the Government also introduced its Unified Payments Interface (UPI), an instant real-time payment system to facilitate inter-bank transactions. Unlike the closed system of Paytm, where both customer and merchant have to be on the platform for it to work, UPI is an open interface – effectively granting everyone mobile access to the payment system.

However, UPI payments do not contribute direct revenues – they are offered as a free service, with zero merchant discount rates imposed. Rather, they have become a customer acquisition tool for companies intent on cross-selling other financial products using the data gleaned from payments.

Instead of chasing share, Paytm’s strategy in UPI has been to focus on the merchant side. This is reflected in its position as the leading beneficiary bank in the UPI system. More broadly – across both UPI and its legacy wallet business – Paytm’s growth in the consumer-to-merchant payment category has been rapid.

In 2021, While Payment Sevices has seen the huge competition and stagnant growth Paytm Pivoted to build a complete financial Ecosystem.

Paytm leads on merchant payments and has built an ecosystem of synergistic fintech verticals around its 'super-app. The ecosystem spans payments (wallet/UPI), full-suite merchant acquiring, credit tech, digital bank, wealth, and insurance tech. I believe the super-app battle in India is not a 'winner takes all but a game of execution, business building, and creating a superior customer experience with ecosystem integration.

Not just a super-app

Paytm has a-350 Mn installed base, -50 million active user base, and a 20 Mn+ merchant base (includes online and offline merchants). It offers full-suite merchant acquiring solutions - QR codes, PoS solutions, and payments gateway. It also offers point-of-sale sound-boxes (a speaker that announces payments received using Paytm). Merchants with a sound-box have shown higher engagement. It also offers Android-based smart-PoS terminals. The smart-POS offers unified payment acceptance cards, QR-based mobile payments on a single device and can also help with digital marketing, inventory management, etc. Paytm Payments Bank with - 60 Mn accounts is laying the foundation of an inclusive digital bank.

Paytm's App Franchise Summarized:

Hope It helped you to get a glimpse of what is Paytm? Or Answer your questions like Is Paytm IPO Worth Buying? Some questions like when Paytm IPO will come? and Will it be a success? will be interesting to watch on. #Paytm #IPO #Digitalpayments #superapp #India #Digital #UPI #wallet #POS #credittech #fintech #insurancetech #banking Feel Free to comment and Share

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