Beyond The QR Code:Taking A Leaf Out From The Paytm Saga

It was just a couple of years back that an advertisement, with the tagline “Patym Karo”, became hugely popular in the country. The ad would make its presence felt multiple times in our day in a very subtle manner, in the Radio as we meander through the traffic, in the form of umpteen billboards on the roadsides, and so on. But what truly surprised me then was the rapid popularity this comparatively new platform gained among a plethora of customer bases. Though different modes of digital payments were already in place for quite a long time, it was with the emergence of Paytm that it gained widespread adoption, even among those segments of people who are not very familiar with the dynamic technological changes happening globally.

Today Paytm has come a long way from being a platform for mobile recharging to receiving the scheduled bank license from the Reserve Bank of India and is all set to embark on a more rapid growth trajectory into new business verticals. As the company, which was majorly into the payments business, ?prepares to foray into and explore more avenues including lending, investments, broking, wealth management, and insurance, it is baffling to note that Paytm, as a company, still grapples with many challenges and roadblocks in its way. The company is yet to achieve breakeven. In 2020-21, it had made Rs 1,701 crore losses on a revenue of Rs 3,186 crore. The Paytm IPO debut was one of the major IPO debut debacles that we witnessed in recent times. Yet, Paytm continues to walk ahead with confidence in its growth journey. And here is where entrepreneurs and businesses can take a leaf out from their story. What exactly are the reasons for this decade-old company to claim its spot as one of the major leaders in India’s mobile payments market, with a market cap higher than even many well-established banks in the country? Here are a few of them:

1.???Early mover benefit:

Paytm’s founder Vijay Sekhar Sharma launched Paytm in 2010 as a prepaid mobile and DTH recharge platform, at a time when India was slowly transitioning from traditional financial transactions processes to digital payment processes. Paytm could realize quite early the immense potential and multiple revenue generation sources that the digital payments market can hold out in the days to come. They ensured to invest in and build the right technologies which would enhance and complement their digital systems. And clearly, they remain one of the earliest players in the space.

?2.???Utilizing opportunities

Paytm could leverage the various opportunities that presented itself during its growth journey and effectively utilize them to script its success story. The demonetization announced by the Govt of India in 2016 is one such case to point out, which gave Paytm the much-needed impetus to propel them to higher growth and expansion. The company realized the huge opportunities that lay before them as the nation was making a paradigm shift to a largely cashless economy and effectively formulated strategies to approach and penetrate markets at the right time. Soon enough, the company's user base catapulted from 140 million in October 2016 to 270 million in November 2017.

?3.???Market penetration:

Paytm can be safely considered a frontrunner in creating a vast customer base across the length and breadth of the country when it comes to digital payment processes. The five-step Dupont or extended Dupont analysis mentions how a company can increase its profitability, either by increasing the prices of its products or by increasing sales through market expansion. Paytm has followed the latter method. Not only is the platform preferred among the urban population and large businesses, Paytm could effectively bring into its fold the unbanked rural population as well as small and micro-businesses. Paytm has played a pioneering role in creating?“digital villages” in the country.

4.???Keeping it convenient and simple

?Unlike the usual trend of enticing customers by introducing new products, Paytm offered the market what the customers need – a non-complicated, convenient, and cost-effective way to make payments seamlessly. Paytm can handle around 5000 transactions per second. Users can conveniently make their payments by either scanning a QR code of the shop or by entering the mobile number of the recipient. There is no hassle of keying in multiple passwords or OTP. Transactions are processed instantly. What makes the system more impressive is that the ease of use does not come with a compromise in the security and safety of customer accounts. The Company uses Verisign-certified SSL (Secure Sockets Layer) 128-bit encryption technology, which ensures that the online information of the users including the password and other financial details, is safe and well protected.

?5.???Robust in house technology:

In the underbelly of the simple Paytm products that we see today, lies complex technological architecture, which is being diligently developed, maintained and upgraded by about 200 product managers and 700-800 engineers working on different aspects of the app. The company prefers to have all transactions routed through its own platform, by using its own payment instruments which are built in-house. Focus on app stickiness is given much importance and Paytm keeps all the products within the same Paytm app so that users can move from one product to another seamlessly. Integration of multiple products within the same app also helps Paytm cross-sell more effectively to customers. Even within UPI, Paytm Payments Bank is the highest beneficiary bank and has the lowest technical decline rate because of its robust technology.

?Going forward, India’s digital payments business is growing in leaps and bounds. Given that the country is expected to have over one billion internet users by 2027, the pace in digital payments is expected to grow further. With the recent scheduled payment bank status conferred on Paytm Payment bank, the company is well-placed to unlock the potential of an emerging market by expanding its financial services operations. With their efficient data analytics capabilities and low acquisition cost, Paytm is definitely a mighty competitor for banks and other financial institutions looking to expand their market share in digital payment businesses. To have a heads up in the competition and to stay ahead it has become imperative for the market players to match their product efficiency, technology as well as pricing to an equally competitive value so as to attract more customers to their fold.