November 9, 2013
At present, more than 45% of online consumers in the nation use only the mobile to access the Internet. For many it was the first internet experience via mobile. This is where PayTM has emerged and is trying to grab as much share as possible in the mobile recharge, bus travel booking, DTH recharge and other mobile payment services. As per mobile and app pundits and more importantly consumers, the Design of their app is world class. Users find it intuitive, hassle free and an experience that make them come back to do transactions again and again. This is a good sign for Indian software product companies focusing on India, who have largely struggled in the UX/UI and design of the product.
Paytm was founded by Vijay Shekar Sharma who also founded the parent company One97. The company is currently led by Harinder Takhar as its CEO. The company has also partnered with various other internet businesses and offers e coupons on every recharge to develop an ecosystem around online transactions. Paytm has partnered with several mobile operators in India like Vodafone, Airtel, Aircel, BSNL, Idea, MTNL, MTS, Tata Docomo , Loop mobile, Uninor, Stel, Virgin, Cheers and Ping to offer the service. Paytm is backed by investors like Intel capital, SAIF partners and SAP ventures.
Paytm has also adopted the Immediate Mobile payments service which links the bank accounts to the mobile numbers. Users can deposit virtual money with PayTM and it can then be used for a variety of purposes:
The company makes a ‘commission’ on prepaid recharges. Rs 10 for each transaction is charged for post-paid bill payments. A figure between Rs 5 and Rs 15 per bill is by Utility companies to PayTM. They also provide users with coupon deals. In some cases, redemption charges are levied on merchants for the coupons.
Paytm has been allowed by Reserve Bank of India to offer their customers semi closed prepaid wallets- which allows the customers to store money in these wallets and buy goods and services from third party merchants. This will be huge. Reliance is another big company that recently acquired their license for a semi closed prepaid wallet in India. You can read Lets Talk Payments article on Reliance’s foray into Payments.
LTP View: The user base of Paytm stands at 3.5 Mn users and is growing steadily. Paytm is a unique application in its space with few other competitors in the market. The company started out as a recharge app and is trying to expand its acceptance among users by bringing in more features into the application. It remains to be seen how successful Paytm will be in expanding its user base and market reach.