Paytm's Foray into Payments Banking

Paytm's Foray into Payments Banking
Case Code: BSTR578
Case Length: 11 Pages
Period: 2010-2017
Pub Date: 2019
Teaching Note: Available
Price: Rs.300
Organization: Paytm
Industry: e-commerce payment system
Countries: India
Themes: Diversification Strategy, Digitalization
Paytm's Foray into Payments Banking
Abstract Case Intro 1 Case Intro 2 Excerpts


About Paytm

Sharma founded 'One97 Communication Limited' (One97) in Noida, a city in the northern part of India, as a mobile value-added service provider in 2001. One97 offered various b2b services such as developing innovative content, messaging, and mobile-to-order network applications. In August 2010, Sharma started a prepaid recharge app under the ‘Paytm’ brand.. ...

Diversification into Payments Banking

After receiving a license from the RBI in August 2015, Paytm launched a beta version of the PPB app for its employees in May 2017. In November 2017, it formally launched the app for external customers. Initially, PPB accounts were available on an invite-only basis. Paytm customers could request an invite by going to the Paytm website ( or using the Paytm mobile application. Sharma said, “The Company was moving towards being a differentiated bank that will attempt to solve the larger problem of payments.” Paytm decided to transfer all the active wallet accounts to Payments Bank. There were many factors that contributed to Paytm’s decision to diversify into payments banking. These included the threat from Unified Payments Interface (UPI), which had forced many leading mobile wallet players such as MobiKwik , and Oxigen to diversify into other business verticals, and the growth in the domestic remittance market, with the market reaching US$80 billion in 2018...

Challenges Faced by Payments Banks

Analysts opined that Payments Banks were like newborn babies in front of the well-established old public or private banks. They opined that it would be a Herculean task for PPB to create awareness about its services and motivate people to adopt its payments bank rather than traditional banks...

Opportunities for Payments Banks

Nevertheless, the low penetration of banks and ATM services in India offered a huge opportunity for the expansion of payments banks like PPB in India. Additionally, the GoI’s push toward cashless transactions was opening up new avenues for payments banks...

The Road Ahead

Industry experts opined that even though demonetization, high penetration of the internet, and smartphones had created a new avenue for cashless transactions, it would not be easy for PPB to capitalize on this opportunity as the majority of Indians preferred cash transactions...


Exhibit I: Name of Applicants got Approval for Payments Bank from RBI
Exhibit II: Other Players in Payments Banking Industry
Exhibit III: Timeline of Paytm
Exhibit IV: Paytm Payments Bank at a Glance
Exhibit V: Internet Users in India (in million)

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