Founded in 2010 by Vijay Shekhar Sharma, Paytm has grown to 220 million wallet users and diversified its offerings beyond mobile recharges to include ticket booking and postpaid payments. Softbank and Alibaba are key investors, with Paytm focusing on financial inclusion and merchant lending within India's economy. The company aims to enhance its revenue through a marketplace model and innovative financial products while responding to competitive pressures from platforms like WhatsApp.

1. Dario de Wet
© Dario de Wet
Case Study Overview

2. • Founded in 2010 by Vijay Shekhar Sharma.
 Payments and Commerce.
 US$135mn within wallet ecosystem.
 ~630% growth to 220mn wallet users over two years (700 000 new users added on one single day).
 Initially offered mobile and digital television (DTH) recharging only (Control ~30% of Indian recharge market).
 Consumer brand of One97 Communications.
• Diverse service offerings:
 Book tickets: Bus, trains, flights, movies, hotels.
 Buy: Online shopping (Offline payments accepted).
 Pay: Uber.
 Postpaid payments: Mobile, broadband, insurance premiums, loan EMI payments, gas bills, water & electricity.
 Recharge: Mobile phones, metro cards, DTH cable, data cards.
• SoftBank Group invested US$1.4bn in Q2 2017.
 US$1bn (14.2%) in new shares and US$400mn in existing shares.
 Alibaba Group previously invested US$680mn (40% stake) Q4 2016.
 Ant Financial (20%) & Alibaba (20%) – Alibaba Group (40%) as at Q4 2016.
‘Pay Through Mobile’
US$7bn Valuation (Q2 2017)
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3. • Web-commerce & App-commerce:
 Website, mobile website, mobile app (Android/iOS) and affiliate networks (blogs, coupon websites and review websites).
 Marketplace model – X% seller’s commission on total sale value (pre-tax).
 Commission ranges between 0% and 20% (product dependent).
• Payments & Wallet Integration and Transaction Discounting Rate (TDR):
 Commission-driven.
 1. Payment gateway commissions average between 1.8% and 2%.
 Debit card ‘Merchant Discount Rate’ (MDR) charges capped at 1% (RBI enforced).
 2. Mobile recharge commissions vary according to MNO structure:
 National MNO: 2.5% - 3% (large transaction volumes).
 SME & New Business: Up to 5%.
 Aggregators (Oxigen, Euronet and Cyberplat): Less than 5%.
• Seller Services:
 Listing fee & onboarding fee (doorstep service to explain online selling process).
• Payments Bank:
 See slide 8.
• Merchant & Micro Lending:
 See slides 9 & 10.
Revenue Model
“The aim is to build a new business model in the banking industry, focused on bringing financial services to
hundreds of millions of unserved or underserved Indians.” - Vijay Sharma, CEO and Founder.
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4. • Higher daily transaction activity than all of Indian E-commerce/M-commerce combined.
 Cleartrip, Flipkart, Jabong, MMT and Yatra (Flipkart has acquired eBay’s India operations).
• Cashback-driven user stickiness.
 40% to 60% cashback incentives on all products ( industry norm ~5% to 10%).
 ‘Cash’ returned into mobile wallet - Enhances organic Paytm ecosystem growth.
• Maximize revenue-generating opportunities (interest-yielding prospects).
 Time lag between money-received from customer and money-paid to vendor (T&Cs).
 Paytm earns interest on the outstanding amounts.
 Paytm marketplace: The money owed to the merchant is only paid once the return-period has passed.
Revenue Model
“The marketplace model generates merchant and consumer transaction history, which gives worth to our
financial services, business and bank.” - Vijay Sharma, CEO and Founder.
© Dario de Wet

5. Competitor Matrix
Wallet E-Commerce Bookings Deliveries Taxi Offline Shops P2P Recharge
Paytm Paytm, eBay, Croma
Paytm, Booking.com,
IRCTC, BookMyShow,
MakeMyTrip, Cleartrip,
PVR Cinemas
Swiggy, Zomato Order,
Grofers, BigBasket
Uber, Meru ✔ ✔ ✔
Airtel Money eBay, Myntra BookMyShow - - ✔ ✔ ✔
Vodafone mPesa eBay, Walmart India BookMyShow - - ✔ ✔ ✔
Jio Money eBay BookMyShow - - ✔ ✔ ✔
FreeCharge SnapDeal, Jabong IRCTC, BookMySHow Swiggy, Zomato Order Meru ✔ ✔ ✔
MobiKwik * eBay, Jabong, Myntra
MobiKwik, IRCTC,
BookMyShow,MakeMyTri
p, Cleartrip, PVR Cinemas
Swiggy, Zomato Order,
Grofers, BigBasket
Meru ✔ ✔ ✔
Ola Money
eBay, Jabong, Myntra,
Croma
MakeMyTrip,
BookMyShow, Cleartrip
Zomato Order, Grofers,
BigBasket
Ola ✔ ✔ ✔
PayUMoney **
eBay, Jabong, Myntra,
Croma
MakeMyTrip,
BookMyShow, ClearTrip
Zomato Order, Grofers,
BigBasket
- ✔ ✔ ✔
ItzCash Yebhi
BookMyShow,IRCTC,Yatr
a,Cleartrip,Redbus
- - ✔ ✔ ✔
Oxigen eBay, Croma
BookMyShow, IRCTC,
PVR Cinemas
- - ✔ ✔ ✔
PayPal TBD TBD TBD TBD TBD TBD TBD
Amazon TBD TBD TBD TBD TBD TBD TBD
WhatsApp TBD TBD TBD TBD TBD TBD TBD
* Offers physical cash pickup and wallet-loading service (limited to Delhi, Gurgaon, Mumbai and Jaipur regions only).
** Strong focus and presence amongst SME and other small service providers. Also serves as a payments gateway, and is launching a rental-free POS terminal to improve offline penetration. © Dario de Wet

6. The Art of Timing
• Financial inclusion has become Paytm’s primary focus.
 Aim to financially empower ~0.5bn Indians through Paytm platform.
 200mn+ users (~15% of total Indian population).
 Accepted by 3mn+ merchants (primary focused on the 50mn SMEs within the Indian economy).
• Narendra Modi (Indian Prime Minister) announces demonetization of ₹500 and ₹1000 notes – November 10th, 2016.
 Combat black market, increase transparency and digitize the economy.
 86% of India’s cash went out of circulation overnight.
• The benefits of demonization.
 20mn+ new Paytm users since announcement.
 1 000% growth in funds added to Paytm wallets.
 300% growth in Paytm app downloads.
 500% increase in weekly transactions per user [18 transactions per user per week (previously at 3 weekly transactions per user].
“For us, the journey to enable fellow countrymen with digital payments and become a part of financial
inclusion has only started right now.” - Vijay Sharma, CEO and Founder.
© Dario de Wet

7. Paytm Payments Bank
• Bringing financial services to all unserved and underserved Indians.
 First virtual wallet to be ‘green lit’ by the Reserve Bank of India (RBI).
 Accounts, loans, insurance and other financial products.
• Traditional bank – CASA (current account/savings account) ; Payment bank – WACASA (wallet/current account/savings account).
 Can accept deposits from individuals and SME’s up to ₹ 100 000 per individual customer.
 Cannot issue traditional loans or credit cards – Debit cards only.
• RBI’s main focus is on deepening financial inclusion.
 21 entities were ‘green lit’ in-principal last year (11 payment banks and 10 small finance banks).
 Telenor Financial Services, IDFC Bank, Tech Mahindra, Cholamandalam Investment and Finance Company – detracted payments bank license (business decision).
 Only Airtel (November 2016) and Aditya Birla Idea Payments Bank (1H 2017) remain.
• WhatsApp.
 Biggest threat.
 ~160mn MAU (monthly active users) in India.
 UPI-based payment/transfer interface.
“I just need consumer data and this data allows us to build superior financial services, micro loans, advances
for merchants, cash advances, insurance and even wealth management .”
- Vijay Sharma, CEO and Founder. © Dario de Wet

8. “Merchants can now get a digital footprint at zero cost, courtesy which they will get access to low-interest
loans.” - Kiran Vasireddy, Senior VP.
Merchant Lending
• Collateral-free working capital loans for merchants (via FSP partnerships – Capital Float, Aditya Birla Finance & Capital First).
 ₹ 50 000 – ₹ 20 000 000 (dependent on eligibility and working capital requirements).
 12% - 24% annual interest, payable over 2 to 24 month period.
 SME Focus - Retail stores (kitanas), taxi drivers and milk cooperatives.
• Credit scores using transactional data as stimulus.
 Marketplace data to create credit profiles (e.g. value and volume of transactions).
 Driven by Alibaba investment and subsequent success of Alibaba’s Sesame Credit in China.
• Partners have full loan sanctioning rights.
 Partnership with Capital Float (confirmed), Aditya Birla Finance (interest shown) and Capital First (interest shown).
• Current KYC process – Laborious.
 KYC is required for all transactions above ₹ 20 000 (RBI regulatory requirement).
 Visit Paytm KYC center / Request visit to your home.
 Must have RBI-approved documents (Aadhar card, passport, driving license, voted ID card or NREGA job card).
 PAN card number only mandatory for single transactions worth more than ₹ 50 000.
 Unlimited transfers once KYC approved.
© Dario de Wet

9. Micro Lending
• Collateral-free micro loans (via FSP partnerships - ICICI Bank).
 ₹ 5 000 – ₹ 20 000 (dependent on eligibility and working capital requirements).
 No KYC required (only for transactions above ₹ 20 000).
 TBD interest rate.
 ~30 minute transaction time.
• Credit scores using transactional data as stimulus.
 Marketplace data to create credit profiles (e.g. value and volume of transactions).
 Large emphasis on electricity and mobile bill payment history.
• Rival products.
 MobiKwik has entered into a partnership with consumer-lending marketplace (CashCare), to pilot its micro-loan service.
 ₹ 500 – ₹ 25 000 to 25 000 users.
 Pilot ran through April-May 2016.
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10. • Mobile Insurance
 Free protection (to the lesser of ₹ 20 000 or the last recorded balance) against unlawful debits and theft from Paytm wallet accounts.
• Digital Gold
 Partnered with gold refiner MMTC-PAMP, allowing customers to electronically trade gold.
 “Gold is the preferred form of investment for Indians” – World’s largest consumer of gold (24 000 tones worth US$900bn stocked across homes and bank lockers).
 KYC is required for all transactions above ₹ 20 000 (as per traditional Paytm KYC requirements).
• Paytm Food Wallet
 Instant tax-free food allowances for businesses.
 RBI (Reserve Bank of India) has asked all meal coupon operators to be digitized by the end of 2017.
 Allows employers to pass-on food allowances to employees under the government-approved tax-redemption bracket.
 Additional employee benefits include: cashbacks, discounts and exclusive deals.
 ‘Nearby’ function added to allow users to locate closest food outlets.
Innovation: The Path Forward
“We are on course to introduce a money market fund, credit scoring system and other functions similar to the
architecture of Alipay by 2020” - Vijay Sharma, CEO and Founder.
© Dario de Wet

11. Contact Details
Should you want a PDF version of this report, to connect and/or for speaking enquiries; please reach out using the details
below:
E Dario.dewet@gmail.com
L Linkedin.com/in/dariodewet
P +2760 694 0573
© Dario de Wet