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OPPORTUNITY ANALYSIS: THE STORY OF PAYTM DURING DEMONETISATION

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 OPPORTUNITY ANALYSIS: THE STORY OF PAYTM DURING DEMONETISATION

By Kandarp Singh*, Sayani Mandal** and Ahaana Mahanti***

_____________________________________________________________________________________

*​Full Name:​ Kandarp Singh

Position: ​Research Associate

Institute: ​International Management Institute Kolkata

Address: 2/4c, Judges Court Road, Alipore, Kolkata-700027

Contact Number: + 91 9038445676

Email address: kandarp.s@imi-k.edu.in; kandarp48@gmail.com

_____________________________________________________________________________________

** Full Name: ​Sayani Mandal

Position: ​Research Officer

Institute: ​International Management Institute Kolkata

Address: 2/4c, Judges Court Road, Alipore, Kolkata-700027

Contact Number: + 91 9051664298

Email address: s.mandal@imi-k.edu.in; sayanimandal84@gmail.com

_____________________________________________________________________________________

*** Full Name: ​Ahaana Mahanti

Position: ​Research Officer

Institute: ​International Management Institute Kolkata

Address: 2/4c, Judges Court Road, Alipore, Kolkata-700027

Contact Number: + 91 9681004083

Email address: a.mahanti@imi-k.edu.in; ahaana.mahanti@gmail.com

 OPPORTUNITY ANALYSIS: THE STORY OF PAYTM DURING DEMONETISATION

ABSTRACT

The demonetisation drive of 2016 has by far been one of the most significant economic events of the
nation. In a nation where liquid cash accounted for about 96percent of the monetary transactions before
this unexpected declaration, a large section of India’s population was badly hit by the liquidity crunch
that followed. We may observe the upward trend in the amount of digital payments which resulted out
of Prime Minister Shree Narendra Modi’s unceasing efforts of transforming the nation into a cashless
economy. Mobile wallet (m-wallet) platforms found themselves to be in a lucrative position while
exploiting the underlying opportunities in the midst of this challenge. This case has been developed
around Paytm, an e-commerce platform that started off as a mere mobile recharge website in 2010 by
One97 Communications. Paytm that stands for Pay-through-mobile is currently the leading market
player in the e-wallet industry. In this case study we have made an attempt to cover the marketing and
positioning strategies of Paytm particularly right after the demonetisation drive was announced on
November 7, 2016. Paytm observed about 1 million people getting themselves digitilised post
demonetization. Paytm’s success story may have evolved from its quick and witty approach to provide a
convenient solution to the widespread temporary cash crunch with banks imposing stringent withdrawal
regulations and ATMs running out of cash. The advertising campaign “Ab ATM nahi Paytm Karo” ensured
to have a reach beyond the consumers to the level of the smallest retail outlets and small merchants who
were encouraged to accept payments through its QR Code mobile payments solution.

KEYWORDS: ​digital payment; m-wallet; marketing strategy; positioning strategy; opportunity analysis;
comparative analysis; corporate strategy; strategic intervention
STORY OF PAYTM
1 2
Launched in 2010 by One97 Communications Limited , Vijay Shekhar Sharma ’s brainchild, ​Paytm
(earlier written as PayTM) began its journey as a recharge and bill payment platform which made its way
into the e-commerce market in the year 2014. Extending continuous 24*7 care to the users, building
3
trust, promising happiness and assuring them immediate money refund against any issue , the company
over the years explored both the possible and impossible in the field of e-commerce and evolved as an
e-wallet, a mall, a destination to book hotels, movie tickets, train, flight and bus tickets, alongside being
a payment destination offering ease of quick utility bill payment, insurance, loan & education fee
4
payment . In other words, it arranges for ease of payment on almost all possible needs of daily life
ranging from daily/monthly essentials, utilities (electricity bill, metro card, gas, and water),
entertainment, travel, mobile recharge, electronic gadgets, appliances, fashion and many more.
Paytm short for ​‘Pay Through Mobile’ is an Indian electronic payment and e-commerce brand based out
of Delhi NCR founded by Vijay Shekhar Sharma, the man who was ranked 18​th by India Today in ​India’s
5
50 Powerful People (dated April 14, 2017). He acquired 1567​th rank in the ​World Billionaire's List ​by
6
Forbes in the year 2017 becoming India's youngest man to be featured on the list. Being the pioneer of
an idea that was once audacious, a believer in challenging the unknown, made internet his playground
and started experimenting with the three basics of internet: (i) content, (ii) advertising and (iii)
7
commerce. His dedication towards eliminating plastic money and intelligent use of innovative
marketing strategies made Paytm reach where it is today. Paytm today is almost a verb now,
synonymous with Digital Payments, and is also one of the defining pillars of the country’s growth story.
Sharma’s brainchild was the biggest beneficiary of Prime Minister Shri Narendra Modi's surprise
demonetisation in the year 2016 and with over 200 million users, Paytm so far has the deepest

1
One97 Communications Limited is the parent company of Paytm. Retrieved from :
http://www.one97.com/about-one97.php Last accessed on August 13,2017
2
Vijay Shekhar Sharma is an Indian entrepreneur, founder & CEO of Paytm Mobile Solutions Private Limited
and Founder, Chairman, Managing Director & CEO of One97 Communications Limited. Retrieved from:
https://goo.gl/6Z6hEL​ ​Last accessed on August 10, 2017.
3
Retrieved from : https://paytm.com/ Last accessed on August 28,2017.
4
Retrieved from : https://paytm.com/ Last accessed on August 28,2017.
5
“Narendra Modi, Paytm’s Vijay Shekhar Sharma in Time’s ‘most influential people’ list”, May 17, 2017, Retrieved
from : ​https://goo.gl/HgDsuq ​Last accessed on August​ ​10,2017
6
“Paytm CEO Vijay Shekhar Sharma Debuts On Forbes Billionaires List”, March 22, 2017, Retrieved from :
https://inc42.com/buzz/forbes-billionaire-list-2017/ Last accessed on August 11, 2017
7
“Paytm valued $4.8 bn: Vijay Shekhar Sharma's journey from Aligarh to Alibaba”, March 09, 2017, Retrieved from
: ​https://goo.gl/ikJFwx​ Last accessed on August 3,2017
 8
penetration in India. The founder believes and lives by the mantra “Go Big or Go Home” which is also
seen encrypted on the wall of the Noida Head Office.

Paytm launched ​Paytm wallet in the year 2014 as a digital tool to either transfer funds or to purchase
something in its store, followed by recharge and other payment options. During March, 2017 Paytm
introduced an ​insurance cover​, at no additional cost, to protect its users’ wallet balance, against any
fraudulent use. The company will insure all its customers up to a limit of ₹20,000 or their wallet balance,
whichever is lower and with the cover, any amount lost due to fraudulent transactions as a result of
theft, burglary, loss of device or unauthorised access of a user’s Paytm wallet will now be refunded. This
9
insurance came as a big relief to Paytm customers and merchants .

Paytm rolled out its payment services facility for ​offline merchants in 2015. Within a short span, it
signed up almost 850,000 offline entities revolutionizing the digital payment system in the country. It
received its biggest boost in November, 2016 following the demonetisation fiasco. On November 14,
2016, Paytm claimed to have registered a record of 5 million transactions a day and on 12​th​ and
10
13​th​ November, 2016 a 1000percent growth in the money added to Paytm Wallets .

Owing to the anticipated rise of online grocery shopping during 2018-19, Paytm made the necessary
move by launching ​‘Paytm Zip’​, an e-grocery app to connect grocers with users in the year 2015. With
people becoming comfortable buying even milk and bread online, industry spectators believe grocery to
11
become bigger than electronics and fashion ​(the categories that currently dominate online purchases)​.
The company launched the beta version of the app in selected areas of Bangalore (Bellandur, Iblur,
Sarjapur Road, Kadubeesanahalli, Marathahalli, Kundalahalli). But due to some exigency not disclosed by
the company, they pulled the application from the market within two months from launching the beta
version.

Paytm spread out its wings further to explore the e-commerce market by launching ​‘Paytm Mall’​, a
shopping destination for its users, winning inspiration from the model of China’s largest

8
“The Story behind Paytm’s Marketing…”, Retrieved from: https://goo.gl/4m9K1P 
9
"Paytm introduces free insurance cover for e-wallet”, March 20, 2017, Retrieved from : https://goo.gl/fv3DwJ
Last accessed on July 29,2017
10
“The revolutionary in e-commerce: Paytm’s success story”, January, 2017, Retrieved from :
https://qrius.com/e-commerce-paytm-documentation-harvard/ Last accessed on July 28,2017
11
“Paytm may team up with Alibaba to invest $200 million in BigBasket”, July 25, 2017, Retrieved from :
https://goo.gl/BEKrpn Last accessed on August 11,2017
 12
business-to-consumer (B2C) retail platform, TMall . This application aims to offer its users a combined
benefit of mall and bazaar as sellers. In order to use the platform and qualify for selling at Paytm Mall,
merchants/sellers have to adhere to strict guidelines and suffice the company specified qualification
criteria. To guarantee consumer trust, all products listed on the mall goes through Paytm-certified
warehouse and shipping channels. Following a similar strategy, as pursued by Alibaba’s TMall platform
in China, the company recently launched an online-to-offline (O2O) commerce platform based on QR
codes for organised retail players, small merchants and brands to go online enabling them to showcase
their catalogue to prospective customers. For ease of business, the O2O strategy is applicable for orders
within a specific city so that logistics can be directly managed by the company's logistics partners or the
merchants where which the sellers will pay a fixed fee similar to that of online sellers on the Paytm
marketplace. As of now, the feature focuses on merchants and brands dealing in mobiles, electrical
13
appliances, fashion segments, and packaged fast moving consumer goods . Paytm gives the opportunity
14
to ​Bargain and Shop . Similar to local bazaar, before buying a product customers can directly
communicate with the seller and bargain to get a reduced price or heavy discount on the product. The
application provides real “​over the counter”​ human shopping experience using a text messenger.

In 2015, One97 Communications, acquired the ​title sponsorship rights for India's domestic and
15
international cricket matches ​at home for a period of four years with a bid price of INR 203.28 crores .

Paytm Payments Bank: A feather in Paytm’s cap

In 2015, Reserve Bank of India (RBI) awarded ‘in-principle’ approval to Vijay Shekhar Sharma to set up a
Payments Bank which in January, 2017 was given the final approval. The company declared to begin its
operations from May 23, 2017 with Renu Satti as the CEO of the Paytm Payments Bank. According to the
RBI’s guidelines, payments banks can accept deposits of up to 1 lakh from each individual customers and
issue services such as ATM cards, net banking and non-risk financial products such as mutual fund and
insurance. Payments banks, however, are not eligible to offer loans or credit cards. During 2016, Paytm
separated its wallet business from the horizontal e-commerce portal and they are named as Paytm

12
“Paytm Launches Paytm Mall - Introduces Combination Mall-Bazaar Concept”, February 27, 2017, Retrieved from
: https://inc42.com/flash-feed/paytm-launches-paytm-mall/ Last accessed on July 20, 2017
13
“Offline stores to go online on Paytm Mall”, June 14, 2017, Retrieved from : https://goo.gl/UJUpBx Last accessed
on August 15, 2017
14
“Paytm brings in mobile shopping app with natural bargaining”, Retrieved from : https://goo.gl/eb4Hu3 Last
accessed on July 30, 2017
15
“Paytm wins sponsorship rights for BCCI home matches till 2019”, July 30, 2015, Retrieved from
https://goo.gl/H36uDr Last accessed on August 01, 2017
 16
Payments Bank and Paytm E-Commerce Pvt Ltd. respectively . 51 percent Paytm Payments Bank
Limited (PPBL) is owned by Vijay Shekhar Sharma & 49 percent ownership is owned by One97
17
Communications Ltd .

Funding
Paytm became the first in the country to receive funding from Chinese giant, Alibaba. During March
18
2015, the company received a personal investment from renowned Indian Industrialist Ratan Tata
19
along with a $575 million investment from Alibaba Group . Ant Financial Services Group took a 25
percent stake in One97Communications as a part of a strategic movement. Ant Financial runs Alipay,
China’s largest online payment service, while One97 oversees Paytm, India’s leading mobile payment
platform. Alipay Wallet, Ant Financial’s mobile payment app, currently claims 190 million users, while
20
Paytm says it has more than 23 million users . During 2016, Paytm took a loan of close to INR 300 crore
21 22
from ICICI Bank in two tranches and raised $1.4 billion from Japan’s SoftBank Group in the year 2017 .

Paytm Digital Gold: A footstep towards Gold Bank Account

Paytm launched Digital Gold in collaboration with accredited refinery MMTC-PAMP, which allows users
to buy, sell and even store gold at no additional cost or transaction fee, barring a small amount that
buyers pay as making and delivery charge. Paytm allows users to buy gold for as little as INR 1. Paytm
aims to build a Gold Bank account, which will allow users not only to buy gold, and store it in digital
form, but also to use the gold to buy other services on Paytm - from recharging to pay utility bills, or
book movie tickets to buy shoes and clothes from Paytm Mall. Therefore, this Digital Gold is a footstep
towards the main objective of building the Gold Bank Account. This initiative will increase the liquidity of
gold that usually lies in the locker or staked away in form of jewellery, rarely taken out, except for some
occasion. Sharma wants gold lovers to use gold as digital cash, use it for transactions even if it is for very

16
“Paytm to fold wallet businesses into payments bank”, December 05, 2016, Retrieved from :
https://goo.gl/B7r53o Last accessed on August 03, 2017
17
“Your Paytm wallet will continue to work as it is, and infact, will become more powerful”, December 06, 2016,
Retrieved from : https://goo.gl/eBRBQo Last accessed on August 11, 2017
18
"Ratan Tata's fifth personal investment in the digital economy is Paytm", March 13, 2015, Retrieved from :
https://goo.gl/QdjSCH
19
“How startups have successfully established their own rules of hiring, rewarding & retaining talent”, March 15,
2015, Retrieved from : https://goo.gl/Xdbzm8 Last accessed on August 30, 2017.
20
“Alibaba’s Financial Affiliate Takes 25percent Stake In India’s One97, Owner Of Paytm”, February 05, 2017,
Retrieved from : https://techcrunch.com/2015/02/05/antfinancial-one97/ Last accessed on August 17, 2017
21
“Paytm borrows Rs 300cr from ICICI Bank”, March 12, 2016, Retrieved from : https://goo.gl/RoNZkq Last
accessed on July 31, 2017
22
“Paytm Raises $1.4 Billion From SoftBank in a Largest Funding Round from Single Investor”, May 18, 2017,
Retrieved from : https://goo.gl/e5Z9Ch Last accessed August 01, 2017
small denominations. However, Sharma’s strategy doesn’t get limited here as once Paytm accumulates
enough gold, which will be stored with MMTC, Paytm and MMTC aims to connect the buyer and the
jeweller which will in a way be a win-win situation for three parties-Jeweller, Paytm and MMTC.
According to the World Gold Council, Indians hold more than 24,000 tonnes of gold worth $900 billion
as per the World Gold Council estimates.

Initiatives
Paytm receive around 4,00,000 orders per day which is the second highest number of Internet
transactions in the country after IRCTC. However, with intense competition prevailing in the
e-commerce market where competitors with huge funding are playing a last-man-standing game, a
niche player like Paytm has to try use marketing strategies as innovatively and intelligently as possible in
order to position itself as a brand based on consumer insight, differentiate itself from the plethora of
23
e-commerce players and sustain in the congested e-commerce market . Recently, the company started
setting up awareness camps in every district to help the country go cashless. The Paytm team started
conducting sessions and workshops across schools, colleges, village panchayats and trade bodies to
serve the dual purpose of informing customers about the benefits of digital payments and tap into the
24
widest set of merchants across the country.

AN ANALYSIS OF PAYTM’S MARKETING STRATEGY DURING DEMONETISATION

Paytm suffered huge losses amounting to about INR 1,549 for the financial year 2015-16 compared to
INR 372 crore in the previous financial year. However, November 8, 2016 changed the fate of ​Paytm as
demonetisation came into effect. Paytm may not have come up with an ‘out of the box solution’ in
particular but they were quick to respond to this exigency within few minutes of the announcement
being made public. Some of the notable initiatives taken up by ​Paytm during demonetisation have been
discussed:

Twitter campaigns assuring a fitting solution to the cash crunch problem:

With ATMs running out of cash and the lead time being too long for the new denomination currency
notes of INR 2000 to reach the ATMs, there was immense panic as to the long waiting lines at the banks
and the useless 500 and 1000 rupee notes in hand. As a solution to this, ​Paytm came up with a series of

23
Lime Season 6 Case Study, Retrieved from : ​https://goo.gl/DorVvN​ Last accessed on August 23, 2017
24
“Paytm's case study selected by the India Research Centre of the Harvard Business School”, January 30, 2017,
Retrieved from : ​https://goo.gl/DjtvPo​ Last accessed on August 1, 2017
tweets; one being ​“We have got two words for you: Paytm Karo” followed by the other ​“Ab ATM nahin
Paytm Karo” which were retweeted several times to ensure a wide reach and educate individuals about
going cashless.

Aggressive advertising across print media

November 9, 2016, the very next day of the announcement going public, Paytm came up with full page
ads in every leading newspaper of the country advocating their support in favour of Modiji’s bold move
25
aimed at transforming the nation into a cashless economy. Their ad campaigns were supported by a
trendy hashtag saying ​#Ab ATM nai Paytmkaro!​

Targeting the non-internet user base:

​Paytm could sense that in India internet connectivity is quite an issue and hence emerged the campaign
“​Every Indian, with or without internet #PaytmKaro”​. Non-internet users were provided with an option
to make a missed call to a given toll free number in the ad to process their transactions in a hassle-free
manner in just three steps. The purpose was to reach every corner of the nation; rich or poor, urban or
rural, with or without a smart phone.

Addressing day-to-day problems faced during the cash crisis:

It was quite impractical and tough to transact in INR 2000 denominations for daily needs items. In an
attempt to address this issue, ​Paytm came up with a television commercial ​“Chutte Ki Chinta mat Karo,
Paytm Karo” depicting how people were in a cash-strapped situation finding it difficult to purchase their
daily groceries and making other miscellaneous payments. The advertisement convinced the consumers
that ​Paytm ​would relieve them of this hassle by making direct money transfer possible through their
respective ​Paytm ​accounts. Another campaign ​“Shadi ka shagun cash nai, Paytm karo” ​gained popularity
as demonetisation was declared during the wedding season​.

The QR Code Scanner facility at the bottom of the pyramid:

On account of its massive advertising campaigns, ​Paytm became very popular among small merchants as
well. The method of registering themselves and conducting transactions was quite simple. One could
find ​Puchkawalas, Chaiwalas, Paanwalas a​ nd the local ​kirana s​ tores employing this mode of transacting
money. You would just have to scan the unique QR code offered to each retailer for making a payment

25
“Demonetisation's overnight celebrity”, December 28, 2016, Retrieved from:
http://www.rediff.com/business/special/demonetisation-overnight-celebrity-paytm-vijay-shekhar-sharma/201612
28.htm
successful or you could transfer to the registered ​Paytm ​number instead. On the back of demonetisation
26
one could find a 300 percent growth at offline retail stores in just 6 days .

Tie-ups with big names​:

Some of the big names were Uber, Bookmyshow, Dominos, Jabong and many more. ​Paytm recently
partnered with IRCTC as well. Consumers preferred ​Paytm over card payments as it offered coupon
discounts and cashbacks. With a strong base of 60 million wallet users and partnering up with major
companies ​Paytm​ gained a winning edge over its competitors during the cash crisis.

Choice of media:

Paytm used a mix of major media vehicles like TV, radio, digital and print media for their mass
campaigns. Social media was the first and most influential platform for ​Paytm f​ or immediate outreach.
Paytm released campaigns in 11 different regional languages during this period.

Enormous advertising budget:

27
​ aytm shot up its advertising budget by 300 percent (50 crore a month) during November, 2017 .About
P
INR 600 crore was only set aside for advertisement expenditure for the financial year 2016-17 for
customer acquisition. ​Paytm was the most aggressive amongst all its competitors trying to skim the
cream as early as possible. Since the first day of demonetisation, about 60000 users (a 700 percent
increase in overall traffic) registered with the app every day. The amount of money transferred to ​Paytm
wallets increased by 1000 percent in just two days. All this indicates that the string of marketing
campaigns undertaken by ​Paytm​ were quite a success.

A COMPARATIVE ANALYSIS: PAYTM Vs FREECHARGE Vs MOBIKWIK

The Reserve Bank of India (RBI) has reported a shooting growth of digital payment companies like
28
Paytm, Mobiwik & FreeCharge invigorated by demonetisation witnessing PPI payments worth a

26
“300percent growth at offline retail stores in 6 days: Paytm”, November 18, 2016, ​Business Standard, ​Retrieved
from:
http://www.business-standard.com/article/economy-policy/300-growth-at-offline-retail-stores-in-6-days-paytm-1
16111701698_1.html
27
“Has Vijay Shekhar Sharma’s Paytm bitten off more than it can chew?”, December 12, 2016, Retrieved from:
https://yourstory.com/2016/12/vijay-shekhar-sharma-paytm/
28
Prepaid Payment Instruments
 29
whopping INR 13 billion in value across 59 million transactions in November 2016. To pave its way to
marketing success, it was necessary for Paytm to stand strong amid the pressing challenge imposed by
the demonetisation drive. With competitors waiting for the right opportunity to take the leap, Paytm
was quick enough to gain the first-mover advantage in this regard. So what is it that Paytm managed to
do what m-wallet players like FreeCharge and Mobiwik couldn’t?

Paytm was heavily rewarded with immediate growth post demonetisation owing to a 300 percent rise in
app downloads, a growth of about 6 times in the number of transactions per user per week over a three
30
week period and posted 1000 percent growth in money added to its m-wallet. Paytm has registered
over 5 million users with a total user base of 150 million since demonetisation was announced on
November 8, 2017. The government’s support for digital wallets has given impetus to these m-wallet
players to a large extent. Similarly, Mobiwik released in a statement on November 22, 2016 reflecting a
40 percent growth in app downloads. Currently, Mobiwik has over 35 million registered customers.
Mobiwik’s target for its total value of transactions increased by 10 times to $10 billion for 2017. So far as
FreeCharge was concerned, the Snapdeal owned m-wallet giant revealed that they are getting a new
31
merchant every 30 seconds and aims to reach over 1 million merchants over a period of 12 months.

It can be found from the above data that all of these three major m-wallet competitors, i.e., Paytm,
Freecharge and Mobiwik have seen a remarkable growth in their total value but somehow Paytm has
managed to be the leading player in the market not only because of its aggressive advertising campaigns
at the nick of time but also the attractive offers that came as part and parcel of its promotional
campaigns.

Let us a make an overall comparative analysis between Paytm, FreeCharge and Mobiwik:

Paytm

29
“RBI Data- Paytm, Mobiwik, FreeCharge Growth Induced by Demonetization”, June 10, 2017, Retrieved from:
https://www.indianweb2.com/2017/06/10/rbi-data-paytm-mobikwik-freecharge-growth-induced-demonetization
/
30
“Aggressive Marketing post Demonetization: E-Payment Gateways”, December 20, 2016, Retrieved from:
https://www.admybrand.com/blog/2016/12/20/aggressive-marketing-post-demonetization-e-payment-gateways/
31
“A 7,000percent increase” and other WTF numbers thrown up by digital payment firms post-demonetisation”,
November 24, 2016, ​Quartz​, Retrieved from:

https://qz.com/844564/from-paytm-to-mobikwik-a-7000-increase-and-other-wtf-numbers-thrown-up-by-indias-di
gital-payment-firms-post-demonetisation/
Paytm started off as merely a mobile recharge website. Emerging as an e-commerce platform now
32
known as Paytm Mall (featuring 1000 brand stores and 15000 brand –authorised retailers offering
about 65 million products), Paytm not only offered an interface to shop for categories like apparels,
electronics, shoes, home furnishings, accessories and the like but also offered facilities for movie
bookings, flight bookings, events, amusement parks, hotels and so on with attractive cashback offers
and discounts. Paytm wallet enables a user to transfer money from his bank account to his paytm
account in order to make bill payments and transfer money. From its bargaining feature to enabling
users to make payments in offline mode, Paytm has now achieved the status of being a Payments Bank
licensed by RBI. A recent and a quite appealing feature developed by Paytm was its Digital Gold facility
which enables a customer to buy, sell or store gold at no transaction cost except a small fee to be paid
for making or delivery charges. It is needless to mention that Paytm has established itself a few steps
ahead of its competitors owing to its aggressive marketing campaigns within hours of the Prime
Minister’s decision to eliminate INR 500 and INR 1000 denomination currency notes was made public.
#AbAtmNahiPayTmKaro became a popular tagline for consumers to associate with the fact that in the
middle of this severe cash crunch with ATMs running out of cash, Paytm had come to their rescue to
make transactions more convenient. The QR Code Scanner facility was launched in an attempt to reach
even the lowest level of retail shops and sellers such as the ​Puchkawalas, Sabziwalas ​and even
school/college/office cafeterias started accepting payments via Paytm. The intention was to gain
saliency around money transfers that would include person-to-person transfers, petrol pump bill
payments, payments at kirana stores and movie tickets. A minimum of 40 percent jump is all these
categories was expected on account of the budget of INR 600 crore set aside for its marketing
33
campaigns for its financial year ending March, 2017. Post demonetisation Paytm increased its
advertising spends by three times in all forms of marketing medium, i.e., print, online and television
commercials with about INR 50 crores set aside for only television campaigns.

FreeCharge

32
“Paytm Mall eyes $4 billion GMV run-rate this fiscal”, August 29, 2017, Retrieved from:
http://economictimes.indiatimes.com/articleshow/60277323.cms?utm_source=contentofinterest&utm_medium=
text&utm_campaign=cppsthttp://economictimes.indiatimes.com/small-biz/startups/paytm-mall-eyes-4-billion-gm
v-run-rate-this-fiscal/articleshow/60277323.cms
33
“Paytm banks on Rs 600 crore ad campaign to get word around”, June 7, 2016, Retrieved from
http://economictimes.indiatimes.com/articleshow/52629085.cms?utm_source=contentofinterest&utm_medium=
text&utm_campaign=cppsthttp://economictimes.indiatimes.com/small-biz/startups/paytm-banks-on-rs-600-crore
-ad-campaign-to-get-word-around/articleshow/52629085.cms
With features very similar to ​Paytm​, FreeCharge seems to gain an edge over ​Paytm in terms of ease of
use, speed and its auto-pay option which has covered up for its lack of tie-ups as compared to a large
number of partnerships entered into by ​Paytm​. While ​Paytm seems to have a chunky interface due to
the diverse range of services provided by it, FreeCharge differentiates itself through a clutter-free user
friendly interface. Freecharge has been using various channels for reaching out several merchants even
in the form of freebies such as iPhone7 for merchants to get them on to its platform. Though not quick
enough to exploit the opportunity following demonetisation, FreeCharge took a competitive approach
instead and came up with front page ads to combat the strings of promotional offers advertised by
Paytm (FreeCharge’s front page ad highlighted ‘Before you Go Cashfree, Check FreeCharge’, ​Flat 100 per
cent cashback on Free Charge across lakhs of stores’ as a reaction to Paytm’s ad campaign titled “12:12
Cashfree festival, ​Upto 100 per cent cashback, when you pay with Paytm at over 15 lakh stores between
December 9-12”). What struck us the most was the mere usage of the word ‘flat’ over Paytm’s ‘upto’ in
the ads appearing on Times of India (TOI). FreeCharge may not be as diverse in its range of services as
Paytm, however, it’s marketing campaigns have been churning out appealing offers and tie ups with
several brands, making shopping cash free, and much easier on the pocket.
​ ecame a popular tag line and with all the cash backs that were
#FreeChargeKiyaMatlabCashDiya b
34
offered, it came to be known as ​#FreeChargeKiyaMatlabCashMila!

MobiKwik

Another major player in e-wallet market space MobiKwik also allows wallet-to-wallet and wallet-to-bank
money transfers. MobiKwik wallet can be used to make DTH and mobile recharges, utility bill payments
and it has tie ups with over 50,000 merchants like Dominos, BookMyShow, BigBazar, PVR and the like. It
has introduced a new type of payment scheme known as ‘CashPay’ where users can add money to their
wallet even if they do not use cards or net banking. They will just need to pay the required amount of to
MobiKwik’s agent which will instantly be credited to their wallet.

Another feature that sets MobiKwik apart from other e-wallets is the solution that offers the ability to
remove your account in case you lose your device remotely to prevent unauthorised access. Transaction
history and other account details will be wiped off. Demonetisation has urged MobiKwik to increase
their advertising spends, the focus being mainly or print and online communication. Following Paytm’s
withdrawal of its PoS app a day after the launch for security reasons, MobiKwik introduced its new

34
“FreeCharge Trumps Paytm In Times Of India, On The Biggest Sale Day For Online Wallets!”, December 12, 2017,
Retrieved from:
https://madovermarketing.com/2016/12/12/online-wallets-saving-the-day-in-this-mad-phase-of-demonetization/
feature named ​MobiKwik Lite f​ or consumers who face internet connectivity issues. In its campaign, it
claimed itself to be easy to use and helpful to unorganised retailers and shopkeepers to transact
seamlessly.

According to data in a report prepared by KalaGato Pte. (Reuters), Alibaba-backed ​Paytm witnessed an
increase in market share in the six months to April at 67.9 percent while its rival ​Freecharge ​had a share
35
of 11.4 percent. MobiKwik was lagging behind at 5 percent . The volume of transactions clocked by
payment wallet firms in top 10 metro cities formed the basis for determining these shares.

CONCERNS AND ISSUES

Transaction glitches, a trademark infringement filed by ​PayPal for use of similar color patterns and an
advertising faux pas were some of the critical areas that raised concern for Paytm. Its trading volume
increased by leaps and bounds. Under high pressure the technological backend of ​Paytm seemed to
crumble as it never anticipated the 1000 percent jump in the number of users. There was an urgency to
create a robust platform instead of shifting its entire focus on advertising. This has given way to
suspected insider fraud as there were two reported cases of fraud against 22 private individuals
amounting to about INR 10 lakh. Not only this, ​Paytm’s ​ad campaigns complimenting the PM on his bold
move dragged the company to a political war. The quips , ‘​Pay To Modi’, ‘Pay To Me’ ​aroused a great
deal of controversy.

CONCLUSION

The value proposition of a mobile wallet is not only underlying in the payments feature, but also the
value-added services that can be offered across a mobile-enabled environment. No one wants to be left
behind in this race of customer acquisition in a rapidly changing and intensely competitive environment.
All of them seem to be coming up with attractive offers and unrealistic discounts. The question here is,
in the name of customer acquisition/retention, is this strategy justifiable or long-lasting? Million-dollar
investments are being pumped into the mobile payments industry. While the mobile wallet industry has
a lot to promise on the outside, it has caused the valuation of many public companies to be inflated.

35
“Paytm hogs market share at 68percent vs rival Freecharge at 11.4percent, Airtel Money at 5.4percent”, June 20,
2017, Retrieved from:
http://www.financialexpress.com/industry/paytm-hogs-market-share-at-68-vs-rival-freecharge-at-11-4-airtel-mon
ey-at-5-4/726968/
Some companies are also actively investing in mobile payment startups that could have strategic value
for them. Investors too are pumping huge amounts of money into startups that aren’t even close to
becoming profitable. Putting money into something is easy but the tricky part is getting it out. Paytm is
targeting 2 billion transactions by the end of 2017 and a user base of 500 million by the end of 2020.

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