How Paytm’s subscription-as-a-service model is driving higher revenue growth with growing merchant network and device deployments

The SAAS model, backed by Paytm’s growing merchant network and device deployments, has led to strong overall business growth, driven by higher payment volumes and subscription revenues, besides increasing the funnel for our merchant loan distribution

Enabling smaller merchants across India to accept payments online is a key driver for the growth of digital payments in India, as highlighted by several reports. With the increasing volume of peer-2-merchant transactions, it has also become equally important to empower merchants with innovative payment solutions that help them effectively grow their businesses.

Realising the need for supporting merchants, India’s best-known fintech company Paytm has played an instrumental role in coming up with pathbreaking payment solutions and devices.

Paytm’s devices business has been gaining momentum every quarter as the company continues to see greater adoption for payment-based solutions among merchants in the country. With this, the company has expanded engagement with merchants by creating an ecosystem of payments and financial services with its Subscription-as-a-service (SAAS) model. This model has not only empowered merchants but also paved the way for the company to generate stronger revenue from operations.

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The SAAS model, backed by Paytm’s growing merchant network and device deployments, has led to strong overall business growth, driven by higher payment volumes and subscription revenues, besides increasing the funnel for our merchant loan distribution.

Paytm’s merchant base stood at 28.3 million as of the first quarter of the ongoing financial year, while total devices deployed have crossed 48 lakh as of Q2 FY23, marking an increase of 10 lakh compared to the previous quarter. This indicates that the SAAS model, where the company offers payment solutions and devices to merchants for a subscription fee, is already popular among merchants in the country.

This is because merchants intuitively understand the value of digital payments and are willing to pay for technology that makes digital payments easier and more reliable.

The SAAS model has enabled merchants of all sizes to grow their businesses. An entry-level merchant with a mobile QR can upgrade to the Paytm Soundbox device, which allows better reconciliation for merchants, hence enhancing their trust in digital payments, and generating subscription revenues for the company.

Meanwhile, mid-sized and large retailers can use POS devices which enables them to accept mobile and card payments, thus generating both MDR as well as subscription revenues for the company. Paytm also offers a payment gateway that allows online and omnichannel merchants to accept payments across all channels, thus generating MDR revenue and platform fees.

The SAAS model has also enabled the company to expand engagement with merchants over time, from QR payments to devices and then finally credit services. It may be noted that whenever merchants start accepting payments through the Paytm platform, they become eligible for availing loans from financial institutions the company has partnered with.

In its FY22 annual report, Paytm highlighted how this engagement presents it with an opportunity to enable financial inclusion for a large number of merchants. With the SAAS model, Paytm has not only created an end-to-end ecosystem to support merchant partners, but also built a sustainable source of revenue through subscriptions.

-Consumer Content Initiative-

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