The Paytm Merchant Pyramid — What We Offer Merchants From Across the Spectrum

byDilip PrasadLast Updated: December 7, 2022
Our merchant base has expanded to nearly 30 million

Our merchant base has expanded to nearly 30 million as of Q2FY23, with more businesses across the spectrum now joining our platform for accessing the most diverse range of offerings including payment services, subscription devices and even loans.

As the pioneers of QR and mobile payments in India, we have built a strong digital ecosystem for merchants – from the smaller shopkeepers to the biggest enterprise – and enabled them to achieve stronger growth in their digital journey.

Today, merchants intuitively understand the value of digital payments and they believe in our solutions to make their digital payments journey easier and trusted. We continue to see merchants increasingly opt for devices such as Paytm Soundbox and PoS on their counter, with over 5 million deployments as of October 2022.

We have empowered our merchant partners across the country with pioneering tech solutions that allow them to accept payments through a wide range of instruments and also by deploying subscription-based devices that help them with day-to-day payments. Simply put, we have created a pyramid system that facilitates entry-level merchants to omni-channel merchants.

Entry level merchants can use a free mobile QR to accept payments, typically using Paytm Payment Instruments or UPI. Small retailers or offline merchants can then upgrade to Soundbox devices which allow real time voice verification and better reconciliation for merchants, hence generating subscription revenue. Our mid-sized and large retailers also use our POS devices/card machines which enables them to accept mobile and card payments, thus generating both subscription revenues as well as MDR for us. For Online and Omni channel merchants we offer a robust payment gateway product allowing merchants to reliably accept payments across all channels, thus generating MDR revenue and platform fees. Additionally, online merchants can use our app to collect payments, through which we earn MDR and platform fees. We also enable commerce for merchants and allow them to advertise, sell gift vouchers and tickets.

Our Payment Services to Merchants includes revenues from our comprehensive offerings of online and in-store payment acceptance services. Merchants pay MDR for cards, wallet, net banking payments, and subscriptions for devices. The government pays incentives for UPI P2M payments. This grew 56% y-o-y to Rs 624 crore in Q2FY22, signalling that more businesses now believe in our products and solutions to strengthen their business.

Meanwhile, merchant loans offered on our platform in partnership with financial institutions witnessed wider adoption in Q2FY23 with higher ticket size. The total value of merchant loans in the quarter grew 342% y-o-y to Rs 1,208 crore, while volumes surged by 254% y-o-y. This was boosted by growth in our devices business, as more than 85% of loans disbursed were to merchants who also have Paytm devices. In addition, repeat loans continue to see a healthy take up with 50% of merchants having taken a loan more than once. We also offer commerce and cloud services to merchants, where revenue during the quarter grew 55% y-o-y to Rs 377 crore.

As the payment revolution continues in India, we remain committed to empowering merchants across the spectrum with our diverse ecosystem of innovative solutions and carry on with our mission to drive greater financial inclusion in India.

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