Paytm Case Study and Marketing Strategy – The concept of mobile phone wallets was mostly unheard of when Paytm – an acronym for Pay Through Mobile – made its debut in 2010. For more than over a decade, the platform has been enjoying a strong presence in the mobile wallet and UPI services category in the country, despite intense competition from rivals Google Pay, PhonePe and Amazon Pay.
The journey of Paytm founder, Vijay Shekhar Sharma, is an inspirational one. Interestingly, many modern-day entrepreneurs idolize him and try to walk in his footsteps. In this post, we will take a detailed look at the journey of Paytm founder Vijay Shekhar Sharma & the case study and marketing strategies of Paytm.
Table of Contents:
- The background of Paytm Founder
- Setting up One97
- Launching Paytm
- Paytm Funding
- Paytm Marketing Strategies
- Notable Acquisitions
- Paytm founder’s net worth
- Paytm Controversies
- Launching Payments Bank
- Paytm Revenue Model
- Paytm’s Major Competitors
The background of Paytm Founder
Vijay Shekhar Sharma was an extraordinary student – he passed the 12th standard at a mere age of 14. However, because of his poor English speaking and reading skills, he missed out on a lot of opportunities. During his college days, he used to read his books in two languages, first in Hindi and then in English to develop a better understanding and command over the subject and the language.
Whilst in college, Vijay Shekhar Sharma used to spend a lot of time in the computer lab, reading about and imagining himself in the Silicon Valley. By the time he graduated from Delhi College of Engineering, he was an expert self-taught coder. While other students were busy appearing for interviews and GD rounds of companies that thronged the campus, Vijay was ready with his own small-scale start up named XS Communications that made content management systems (CMS). Reportedly, one of his CMS was also used by journalism giant The Indian Express.
Setting up One97
In case you are not aware, One97 Communications is the parent company of Paytm. Though it is very successful today, Vijay Shekhar Sharma had a hard time setting it up. Initially, he borrowed a loan of rupees 8 Lakhs at a principal rate of 24%, which was a huge sum considering that we are talking about late 2000s. Such a high interest rate got Vijay into a cycle of debts, forcing him to take other jobs such as fixing LAN connections, delivering guest lectures, etc.
When the founder of Paytm, Vijay Shekhar Sharma, was looking for investors for Paytm, many big names in the financial world were not quite convinced with his idea of a mobile-first consumer service. So he himself invested a sum of roughly $2 million to launch the brand.
The platform which started as a mobile and DTH recharge platform in 2010 is now an ecommerce store, a payment bank, a fantasy gaming platform and an investment & wealth management company.
Paytm has undergone more than 15 funding rounds so far with Alibaba and Softbank as its major investors. Let’s take a look at Paytm’s recent rounds of funding:
- Raised an undisclosed amount of funds from Alibaba group in 2015, in return for a 42% stake in Paytm.
- Berkshire Hathaway bought 3% stake in Paytm in the year 2018
- Raised $1 Billion from T.Rowe Price, an asset management company based in the United States, in 2019.
- SoftBank owns 20% worth of stake in the company.
- Ratan Tata’s Tata Sons too owns a minority stake in the digital payments platform.
Paytm Marketing Strategies
Over the past few years, Paytm has resorted to many marketing techniques which have often come under the fire of many critics and regulatory agencies. Yet, they have always left a good impression on the audience. In 2019, for instance the company spent INR 200 crore on above-the-line media (ATL), including TV and digital marketing, while INR 150 crore was utilized for below-the-line (BTL) mediums, such as retail initiatives.
For ATL, the funds were split between Cricket sponsorship, TV, print and Radio, with TV getting the majority of the share. Meanwhile, roughly INR 50 crore was spent on digital marketing mediums such as and .
Paytm has always been an active sponsor of cricket tournaments hosted in India, including the IPL and domestic tournaments such as Duleep Trophy, Ranji Trophy, etc. Having served as the official partner of Mumbai Indians, Paytm has been acting as the umpire partner of IPL since 2018.
Acquired fast text messaging platform Plustxt for a little under $2 million.
Acquired Delhi-based tech startup Cube26, which was initially funded by e-commerce giant . Cube26 was known for enhancing user experiences across multiple platforms and devices, with customised applications for Android OS. The startup also developed varied applications for OEMs.
Acquired Insurance firm Raheja QBE for a sum of $76 million in an all-cash deal. Notably, Raheja QBE offers insurance services that cover health, home, vehicles and workplace injuries.
Paytm Founder Vijay Shekhar Sharma net worth
According to a report published by BusinessInsider, Vijay Shekhar Sharma’s net worth rose from INR 18,000 crore in 2018 to INR 23,000 crore in 2020. This resulted in a huge surge in his rank in the wealth index, jumping from rank 171 (in 2016) to rank 44 (in 2020).
Time and again Paytm has made rounds in the news either because of stirring up controversies or becoming a victim of one. Let’s take a look at some of the major controversies involving Paytm in either role.
Putting endorsements with PM Narendra Modi’s picture during Demonetization
While the night of November 8, 2016 started a few days and months of panic for most of the individuals, Paytm was among the few who gained a record number of users and widespread reach. However, one thing they did over the top is putting Prime Minister Narendra Modi’s picture on its print advertisements. Delhi CM Arvind Kejriwal was the first to criticize the move, asking the PM, “What’s the deal” in a sarcastic tweet.
Uttering derogatory remarks against rivals
In a video, presumably from Paytm’s 2016/17 annual event, Paytm founder Vijay Shekhar Sharma can be seen uttering derogatory remarks against rival companies. The founder of the mobile platform though appears to be drunk in the video.
Allegations of leaking data of users in Jammu & Kashmir
In a video, an undercover reporter for investigative news firm Cobrapost was seen having a meeting with the senior vice-president of the company, Ajay Shekhar Sharma, who also happens to be the brother of CEO and founder Vijay Shekhar Sharma. The video shows Ajay spurting out how the company leaked the personal data of Paytm users in J&K to the Indian government. The video, however, could not be verified and Paytm denied all such claims.
When Google removed Paytm from Play Store
Google has a strict policy for apps that wish to get listed in the play store. One such policy is unregulated online gambling, which includes sports betting and paid cash contests. Since Paytm First Games, which is Paytm’s fantasy and cash contests gaming platform, could be accessed from Paytm app, Google removed it after reportedly issuing many warnings. The app was back in play store after making revisions in accordance with Google’s compliance policies.
Launching Payments Bank
Inaugurated by the then Finance Minister, Arun Jaitley, in November 2017, Paytm Payments Bank is a virtual bank account which can be used in the same way you use your physical bank account. With a Paytm Payments Savings Bank account, you can enjoy the following benefits:
- An interest rate of 2.75% per annum, paid monthly
- A virtual Rupay Debit/Atm card
- Zero account fee; free online transactions
Risk free deposits (a maximum of INR 1 Lac of deposits allowed) as the company invests its money only in government bonds.
Notably, Paytm Payments Bank has over 58 million account holders. Through its subsidiary “Paytm Money”, the platform is one of the biggest contributors of Systematic Investment Plans (SIP) to the Indian Mutual Funds Industry. Furthermore, the company has been authorized to offer its services in stock broking, demat and National Pension System (NPS).
Paytm Revenue Model
Paytm generates its revenue from a number of channels. For most of its services, the platform doesn’t charge its customers, but takes a commission from the service providers. Its sources of revenue include:
- Mobile recharges and postpaid bill payments
- Utility bill payments
- Through interest on Paytm wallet balance
- Listing fee for sellers on Paytm Mall
- Withdrawing funds to bank account
- Payment Gateway
- Booking of flight, train and cinema tickets
- Payments Bank
- Digital Gold
Paytm’s Major Competitors
The Indian digital wallet and UPI services market has many companies competing for the top spot. Among them are Paytm, Google Pay, PhonePe and Amazon Pay. While all of them are great in their own rights, Paytm holds the highest market share; though, it faces stiff competition from PhonePe, a venture of Flipkart. A Bloomberg report shows that PhonePe witnessed a surge of roughly 290 million transactions in 2019.
Through this post, we have tried to cover each aspect of Paytm in a much detail as possible. We are pretty sure that now you have a fair idea about the journey of its founder, Vijay Shekhar Sharma, its marketing strategies and business model. In an interview with The Hindu Business Line, Vijay Shekhar Sharma said that in the first 10 years of their journey, they were a wallet and a bank; in the forthcoming 10 years they plan to be a large financial services company.