Paytm – Facts you must Know!

India’s largest digital payments company

(A) About One 97 Communications – Paytm

One 97 Communications Ltd incorporated in December, 2000. One97 Communications Limited that owns the brand Paytm was found by Vijay Shekhar Sharma. Company’s headquarters are in Noida, Uttar Pradesh.

Its investors include Softbank, Ant Financial, AGH Holdings, SAIF Partners, Berkshire Hathaway, T Rowe Price, and Discovery Capital.

Presently, Paytm (a partial abbreviation for “pay through mobile”) by One 97 Communications is an Indian multinational technology company that specializes in digital payment system, e-commerce and finance.

Paytm is India’s leading financial services company that offers full-stack payments & financial solutions to consumers, offline merchants and online platforms. Its Services inclue:

  • Payment services
  • Commerce and cloud services
  • Financial Services

Moreover, the products and services are carefully developed to address large markets, and in areas where the consumers and merchants are underserved.

Also, the company is on a mission to bring half a billion Indians into the mainstream economy through payments, commerce, banking, investments, and financial services.

Vijay Shekhar Sharma, Founder & CEO of Paytm and One97 Communications Limited together own Paytm Payments Bank, country’s largest digital bank with over 58 million account holders.

(B) Journey of Payment Services – Paytm

One 97 Communications has driven innovation in the Indian payments landscape, designing and building products for Indian consumers and merchants alike.

The Company was incorporated as “One 97 Communications Private Limited”, a private limited company under
the Companies Act, 1956, with a certificate of incorporation issued by the Assistant Registrar of Companies,
NCT of Delhi and Haryana, at New Delhi on December 22, 2000.

Subsequently, on the conversion of the Company to a public limited company, its name was changed to “One 97 Communications Limited” on May 12, 2010.

Paytm is currently available in 11 Indian languages and offers online use-cases like mobile recharges, utility bill payments, travel, movies, and event bookings as well as in-store payments at grocery stores, fruits and vegetable shops, restaurants, parking, tolls, pharmacies and educational institutions with the Paytm QR code.

Paytm-Journey

The Company launched a wallet product, Paytm Wallet in 2014. Moreover, the launch of Paytm Wallet saw wide-spread acceptance amongst Indians. In India many of the users of Paytm were making digital and mobile payments for the first time in 2014.

Then, in 2015, the Company launched QR, it was upgraded to All-in-One QR in January 2020. It was the only source QR code that gives merchants the power to seamlessly accept payments from Paytm. Payment Instruments, third party and all UPI instruments directly into their bank account.

Further, in 2020, the Company launched Paytm Soundbox. Paytm Soundbox is an IoT enabled payment acceptance device, providing real time audio confirmation for payment completion.

Thus, given the comprehensive nature of its payments platform, the Company believes that it has better ability to monetize the payments business. This is because the company is not dependent on one or few payment methods where monetization potential is low or zero.

(C) Management-One 97 Communications (Paytm)

i) Mr. Vijay Shekhar Sharma ( Managing Director and Chief Executive Officer)

Mr. Vijay Shekhar Sharma is the founder and Chief Executive Officer of One 97 & Paytm and the Chairman of the Company. He holds a bachelor’s degree in electronics and communications from the Delhi College of Engineering.

Additionally, Mr Sharma oversees the Company’s key strategic efforts including engineering, design and marketing. Moreover, Mr Sharma has featured in ‘2017 Time 100’, the list of ‘hundred most influential people in the world’ by Time magazine.

He has received multiple industry honours such as the ‘Entrepreneur of the Year’ award in 2018 by All India Management Association, ’Entrepreneur of the Year’ at ET Awards for Corporate Excellence’ in 2016 and ‘GQ Man of the Year’ in 2016.

Remuneration: Rs 40.0 million pa for FY22.

ii) Mr. Munish Varma (Non-Executive Director)

Mr. Munish Varma has completed his master’s in business administration from Cornell University. He currently serves as a managing partner at SoftBank Investment Advisers. He was also with Deutsche Bank AG.

iii) Mr. Ravi Chandra Adusumalli (Non-Executive Director)

Mr. Adusumalli holds a bachelor’s degree in economics and government from Cornell University. Also, he is currently the managing partner of Elevation Capital.

(D) Business – Paytm – One 97 Communications

(i) Payment Services

One 97 Communications Ltd has a full suite of payment services for both consumers and merchants which. Company’s payment services enables users to make and receive payments in a convenient, seamless and secure manner. Application of Payment services of the Company can be at both online and at physical stores.

Paytm Payment Instruments

Paytm (together with Paytm Payments Bank, affiliates and financial institution partners) offers Paytm Payment
Instruments. Further, Paytm Payment Instruments allow consumers to use wallets, sub-wallets, bank accounts etc at a wide range of merchants across the country.

These payment instruments can be used on online and mobile platforms, including Paytm app, as well as for in-store transactions.

a) Payments offerings to Consumers:

Paytm-Payments offerings to Consumers

Payments Services to Consumer include revenue from Bill payments. Further, the Bill Payments includes services such as top up of balances of prepaid mobile, DTH, Paytm Wallet, among others, on the Paytm app and payments for utility bills including electricity, cooking gas, water, mobile and broadband, credit card, rent and educational fees on the Paytm app.

b) Payments offerings to Merchants

Paytm-Payments offerings to merchants
Paytm-Payments offerings to merchants
Payment offerings to Merchants

Payments Services to Merchants include revenue from Payment Gateway Services, All-in-One QR Code, All-in-One POS Devices, Paytm Soundbox and Soundbox 2.0, Paytm Business Payments.

Market Share in Payment Services

One 97 Communications Ltd has the largest payments platform in India. The Gross Merchandise Value of ₹4,033 billion in FY 2021. It has an overall payments transaction volume (excluding money transfers) market share of approximately 40%. Market Share of wallet payments transaction of the Company is 65% – 70% in India as of FY 21.

(ii) Commerce and Cloud Services – One 97 Communications

Commerce and cloud services of One 97 Communications provides a lifestyle destination for consumers to avail lifestyle commerce services. These Services include ticketing, travel, entertainment, gaming, food delivery, ride hailing and many more. Easy access to such services within the Paytm App environment plays a critical role in user engagement and retention, and enhances the brand Paytm.

The Company also provide software and cloud services to enterprises, telecom companies, digital and fintech platforms to track and enhance customer engagement, build payment systems, and unlock customer insights and drive higher conversion for Company’s commerce offerings.

Paytm-Commerce and clous services

In FY 2020, the Company processed a total Commerce GMV of ₹14220 Crore, and in aggregate generated over ₹1100 Crore of revenues. Whereas, in FY 2021, the Company processed a total Commerce GMV of ₹4240 Crore, and in aggregate generated over Rs 690 Crore of revenue.

Through Paytm’s wide suite of commerce and cloud service offerings, merchants can connect with consumers to
increase demand for their products and services, and improve their business operations.

Paytm helps the merchants conduct targeted outreach to Paytm’s consumers. It offers services such as ticketing (for entertainment and travel), commerce, deals, loyalty services, mini apps and advertising.

Paytm also provides merchants software and cloud services for various aspects of business. These services include billing, ledger, vendor management, customer promotions, catalogue and inventory management.

Paytm for Business app provides merchants a comprehensive set of business management tools. These tools include real time bank settlement and analytics, reconciliation services, banking services, access to financial services, and many more.

Paytm also provide software and cloud services to enterprises, telecom companies, and digital and fintech platforms to track and enhance customer engagement, build payment systems, and unlock customer insights.

(iii) Financial Services – One 97 Communications (Paytm)

Financial Services is a set of innovative financial inclusion offerings including mobile banking, lending,
insurance, and wealth management for consumers and merchants. The reach, size and scale of payment services
places the Company at the center of payments flows between consumers and merchants. Since, most of the financial services businesses of the Company were launched recently between 2019 and 2021, this segment contributes a relatively small percentage of the total revenue.

Financial services offerings include:

  • Mobile Banking Services : Paytm provides mobile banking services through Paytm Payments Bank, in which the Company owns 49% equity interest. It offers a comprehensive suite of digital banking products for individuals, small and medium enterprises, and large corporates including current account, savings account, salary accounts, fixed deposits (through Paytm Payments Bank’s).
  • Lending: The Company operates a technology platform with capabilities across the entire loan cycle. It includes origination, developing credit risk models, loan management and collection to provide a seamless credit access to its consumers and merchants through Company’s financial institution partners.
  • Insurance and Attachment Products: In collaboration with insurance partners, One 97 Communications offer: (a) attachment products such as movie and travel ticket cancellation protections based on user engagement on its platform and as a part of the payments flow, and (b) Secondly its subsidiary, Paytm Insurance Broking Private Limited, a registered insurance broker with IRDAI offers an insurance marketplace.
  • Wealth Management: One 97 Communications provide wealth management services to its customers. The company provides this service through the Paytm app and the Paytm Money App. The management aims to bring access to wealth management products to a large number of consumers and merchants.

(E) Fraud management, Data Protection & Privacy

One 97 Communications’ incorporates multiple layers of protection for business continuity and system redundancy purposes and to help address cybersecurity risks. The Company has comprehensive cybersecurity policies designed to protect its technology infrastructure and products against these challenges.

Additionally, One 97 communications strive to continually improve its technology infrastructure and product offerings to enhance the customer experience and to increase efficiency, scalability, and security at a rapid pace.
Also, the Software and cloud infra is scanned for security vulnerabilities regularly.

Moreover, the data is completely classified and the Company governs access to information through stringent and strict protocols, on an absolute need to know basis. Approval of access to such data, which is encrypted, requires multiple levels of approvals from the head of the respective business unit, Chief Information Security Officer, and CTO.

(F) Funding Rounds

Paytm is owned by One 97 Communications Ltd

2010

Paytm was founded in August 2010 with an initial investment of US$2 million by its founder Vijay Shekhar Sharma in Noida, a region adjacent to India’s capital New Delhi. It started off as a prepaid mobile and DTH recharge platform. Subsequently it added data card, postpaid mobile and landline bill payments in 2013

2011

Sapphire Ventures (fka SAP Ventures) invested $10 million in One97 Communications Ltd

2015

Paytm received its huge stake from Chinese e-commerce company Alibaba Group, after Ant Financial Services Group, an Alibaba Group affiliate, took 40% stock in Paytm as part of a strategic agreement. Soon after, it received backing from Ratan Tata, the MD of Tata Sons

2016

Paytm raised funding from Mountain Capital, one of Taiwan-based MediaTek’s investment funds at a valuation of over $5 billion

2017

Paytm raised funding from Mountain Capital, one of Taiwan-based MediaTek’s investment funds at a valuation of over $5 billion

2019

Paytm raised $1 billion in a funding round led by US asset manager T Rowe Price along with existing investors Ant Financial and SoftBank Vision Fund

(G) Group Structure

One 97 Communications does not have a holding company. Although, the company has 32 Subsidiaries, of which there are 15 Indian subsidiaries and 17 foreign subsidiaries

Paytm Money Limited

Wholly-owned subsidiary of One 97 Communications, ‘Paytm Money Limited’ has achieved the distinction of becoming India’s biggest investment platform within its first year. Presently is one of the largest contributors of new Systematic Investment Plans (SIPs) to the Mutual Funds industry. The Company has already received approvals to launch Stock Broking, Demat Services and National Pension System (NPS) services, and strives to continue to broaden the financial services and wealth management opportunities to the unbanked and underserved Indians.

Paytm First Games

This Company is another group company (a joint venture between One97 Communications Ltd and AG Tech Holdings), has quickly become India’s go-to gaming and stay-at-home entertainment option for millions of users across the country. The platform caters to all types of gamers with an exhaustive array of games for amateurs as well as esports for gaming pros.

Paytm Insurance Broking Private Limited

Further, Paytm Insurance Broking Private Limited (w.e.f September 28, 2019) is a wholly-owned subsidiary of One97 Communications Ltd (OCL) and has secured a brokerage license from IRDAI. Also, it offers insurance products to millions of Indian consumers across four categories including two-wheeler, four-wheeler, health and life. Moreover, the company aims to simplify insurance and create a seamless, easy to understand online journey for its customers.

Top five Group Companies

Paytm one 97 Communications Top five Companies

(H) Financial Performance & Operational Parameters

Majority of revenue of One 97 Communications is derived from the payment services.

For payment services, the Company primarily generate revenues from

  1. the transaction fee charged from the merchants based on a percentage of GMV (Gross merchandize value)
  2. consumer convenience fees and
  3. recurring subscription fees from merchants for certain products and services, such as Paytm Soundbox and POS

Paytm one 97 Communications segment wise revenue

Around 75% of the Revenue of One 97 Communications is from Payment and Financial Services for FY21. Although Revenue from the same segment in FY2020 was 58.10%.

Commerce and cloud services include commerce lifestyle destination for consumers such as ticketing for travel and entertainment, gaming, food delivery, ride hailing etc. The Company generates revenues by charging merchants a transaction fee, and/or consumers a convenience fee. The fee is typically linked to a percentage of the transaction value.

For software and cloud services, merchants have to pay a subscription fee. Further, for the advertising business, Company runs performance and brand marketing campaigns for merchants. The revenue is generated from charge them depending on the scale and type of campaign.

Further, Commerce and cloud services contributed 24.70% of the Revenue of One 97 Communications for FY21 and 34.10% for FY20.

The total Revenue de-grew by ~14% in FY21 as compared to the Revenue for FY20. Revenue from payment and financial services increased by 10.6%, whereas, revenue from commerce and cloud services decreased by 38.0%.

(I) Employees – One 97 Communications (Paytm)

Over FY 2021, the Company had average of 8,623 on-roll employees worldwide. One 97 Communications also engage contractors to provide the temporary workforce. Also, none of its employees are represented by a labour union. Moreover, it is a fact that the Company has not experienced any work stoppages since its incorporation.


The following table provides a breakdown of average employee base by function for the years indicated.

Paytm-Employees

The Employee benefit expense increased by 5.9% to ₹11,849 million in FY 2021 from ₹11,193 million in FY 2020. The primary reasons for an increase in employee benefit expenses are:

  • Firstly, the expansion of Company’s technology and financial services teams, and
  • Secondlay, the fact that until 2020 the Company subcontracted certain services

(J) Marketing and Promotional expenses as % of Revenue

Marketing and promotional expenses comprise digital marketing, brand marketing, sponsorships, cashback, Paytm points and other promotional expenses, given to consumers or merchants for incentivizing acquisition and retention.

Paytm one 97 Communications marketing and promotion

Marketing and promotional expenses, as depicted in the chart above, in FY 2021 reduced significantly from FY
2020. Company’s marketing and promotional expenses reduced from 105.5% in FY 2019 to 19.0% in FY 2021

There has been reduction in Marketing and promotional expense primarily due to a reduction in customer acquisition and retention costs, such as cashbacks, digital marketing expenses and brand marketing expenses. Thus, the Company has been able to improve contribution profit and contribution margin.

Paytm one 97 Communications financial parameters

One 97 Communications Restated loss for FY 2021 declined by 42.2% as compared to loss in FY 2020.

Adjusted EBITDA margin has improved from (130.3)% in FY 2019 to (59.0)% in FY 2021

(K) Objective of IPO

Paytm acquires consumers through marketing, cashback and promotions, and merchants through marketing and sales personnel, and offers them access to technology through the consumer and business apps, payment instruments, payment platforms, devices, cloud and software.

Infact, One 97 Communications Ltd has not made substantial investments in fixed assets in the past. Moreover, it do not currently intend to make substantial investments in fixed assets in the future either.

One 97 Communications has also expanded the business in the past through investing in new business initiatives, undertaking acquisitions and entering into strategic partnerships and intend to continue to do so in the future.

The management has expressed that it will utilise proceeds from IPO towards:

  • Growing and strengthening Paytm ecosystem, including through acquisition and retention of consumers and merchants. Also, providing customers with greater access to technology and financial services
  • Further, for investing in new business initiatives, acquisitions and strategic partnerships; and
  • General corporate purposes.

(L) Strengths

i) Trusted brand, scale and reach

Paytm is available across the country with “Paytm karo” (i.e. “use Paytm”) evolving into a verb for hundreds of millions of Indian consumers, shopkeepers, merchants and small businesses. An indication of trust in the brand is that Paytm has the highest top of mind recall and unaided awareness among merchants, compared to other digital payment platforms. This represents the strength of the brand Paytm.


Further, the payments platform of Paytm, with a wide selection of daily life use cases and payment instruments, provides large scale and reach to the Company. The Company had 337 million registered consumers and over 21.8 million registered merchants as of June 30, 2021.

ii) Product and technology DNA

One 97 Communications had an average engineering and technology team of 2,550 members and 2,471 members in FY 2021 and in the three months ended June 30, 2021 respectively.

Moreover, One 97 Communications is the only payments company in India that, together with its affiliates, owns each layer of the payment stack. This allows us to integrate payments offering seamlessly with other offerings.

Company’s technology ownership and scope of the ecosystem has allowed the Company to offer services such as Paytm Wallet, Paytm QR, Paytm Soundbox, Gold investments and Fixed Deposit, Paytm Postpaid, Merchant Cash Advance and FASTag. All of these products aim to improve the experience of consumers and merchants who use it on Company’s ecosystem.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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