Detailed SWOT Analysis of Paytm – An Indian Multinational Financial Technology Company

Quick Stats on Paytm

Founder	Vijay Shekhar Sharma
Year Founded	2010
Origin	Noida, India
No. of Employees	10,000+
Company Type	Public
Market Cap	Rs 40,863 Crore (2022)
Annual Revenue	Rs 3,187.60 Crore (2021)
Net Income/ Profit	Rs 1,696.10 Crore (2021)

 

Current News of the Brand

• Paytm gains as Motilal Oswal, Yes Securities raise target.
• Paytm Touches 52-Week High Intraday, Street Remains Bullish On The Stock
• Paytm Launches Alternate ID-Based Guest Checkout Solution
• Paytm Se ONDC network offers up to Rs 150 discount on all products with free delivery.
• Razorpay doubles down on existing customers as new onboarding remains paused

Buyer Persona

SWOT Analysis of Paytm

A SWOT analysis determines the strengths, weaknesses, opportunities, and threats that a firm faces. It’s a tried-and-true management model that lets Paytm compare its company and performance to that of competitors and the industry at large.

It’s an excellent tool for determining where the firm thrives, where it falters, generating remedies, and determining how the organization may expand. To better understand the SWOT analysis of Paytm, refer to the infographic below:

So let us first begin by enhancing the strengths of Paytm from the SWOT analysis of Paytm.

Strengths of Paytm

Strengths are an organization’s unique qualities that give it an advantage in acquiring greater market share, attracting more customers, and boosting profitability. Paytm’s advantages are as follows:

• First in the Market: Paytm was first established in the Indian market which brought the revolution of online payments and wallets. The founder played a wise game and he innovated and introduced Paytm at a time when smartphone sales started booming in the market.
• Ease of Payments: Paytm brought life to ease with round-the-clock payment facilities or transfer of funds anytime, anywhere at 0% charge. This made it increasingly popular and accepted by both urban and rural populations fulfilling the daily needs of everyone.
• User & Merchant Base: Paytm merchant and user base is increasing at a rapid pace day on the day with more than 20 Million merchants & businesses powered by Paytm to Accept Payments digitally followed by 300 million Indian users using Paytm to pay at merchant stores. The number is said to grow more in upcoming years.
• Big Investors: Paytm gets huge funding and financial support from some of the big companies and investors in the world like Tata, Ant Group, Alibaba Group, SoftBank, etc. These businesses have a huge stake in Paytm and this helps Paytm to increase its market valuation and become India’s top.
• User-friendly Service Application: Paytm consists of almost everything from online reservation facility to online retail and recharge etc. The application of Paytm is also user-friendly and security shield protected where you can do transactions without any fuss and worry.
• Bucket of Offers: Paytm is always ahead to grab the attention of its customers using never-ending offers designed with the Indian market mindset and thus it works as a bonus to booming sales.
• Investment & Acquisition: Paytm is known for various acquisitions and big investments in 2013 Paytm acquired Plustxt, and it also invested in logistics startups LogiNext and XpressBees, etc. Such acquisitions and investments have made Paytm strong in the market.
• International Expansion: Paytm not only operates in India but also in Canada & Japan. Paytm launched its services in the Canadian market in 2017 and a joint venture with SoftBank & Yahoo Japan to offer services in the Japanese market in 2018.
• Sponsorship: Paytm acquired the title sponsorship rights for India’s domestic and international cricket matches including IPL, and BCCI domestic matches in India, etc. The rights include sponsor branding of the series with the title sponsor logo, designation as the title sponsor of the series, visibility at the stadium, and broadcast sponsorship rights to increase recognition of Paytm.

Weaknesses of Paytm

Weaknesses are aspects of a company or a brand that should be improved. The following are Paytm’s primary flaws:

• Customer Service: Several customer service concerns, including a lack of a helpline number and FIRC filing delays, are widespread. Call center executives at Paytm are often rude and unable to handle many of the queries.
• Experiencing Fraudulent Activities: Electronic transactions are unquestionably straightforward, convenient, and appropriate. Even yet, it demands a certain amount of risk. As a result, you’ll need technical assistance as well as a secure mechanism to complete the transaction and transfer payments.
• Requires an Internet Connection: The entire transaction mechanism for sending and receiving money, as well as opening an account, is reliant on the Internet and a fast connection. It can function in both advanced and developed environments. Paytm services, on the other hand, would be ineffective in growing economies and developing countries where internet availability is a major concern.
• TDR Rates That Are Higher: Their TDR rates for payment gateways are slightly higher than other companies.
• IT Infrastructure: As Paytm can work only on the internet, it most of the time makes things worse for the user when he/she is zero with cash and relies on Paytm payments at the time of merchant payments. Internet issues can occur in rural areas, remote locations, and even tier 2 cities.
• Services Creating Confusion: Sometimes offering lots of services can also be confusing for users as most users are unaware of all the services that Paytm offers. The level of unawareness of technology and fear of online transactions is making things worse.
• Fear of Losing Money: Indians still have a fear of doing online payments and transactions as most Indians are used to transacting in cash. But things are evolving so the people of India will. Secured digitalization will soon pick up online wallet services. 

Opportunities for Paytm

Opportunities are areas in which a firm might focus to improve performance, improve services, and, ultimately, profit.

• Digital Cryptocurrency: Freelancers and online users are increasingly using digital crypto-currencies such as bitcoins. Many platforms are even willing to accept cryptocurrency. Many variables, such as digital literacy, internet connectivity, and the internet, have contributed to its growth. It also opens the door for Paytm to either launch or begin accepting this currency.
• From Cash Economy Towards Digital Economy: Developing economies, such as India, are aiming to go cashless or reduce their reliance on the currency. It presents a fantastic chance for Paytm to expand its services to capitalize on the potential.

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• Infrastructure: Paytm requires an infrastructure that can handle the goals as well as the expected quick growth in demand following the launch. Infrastructure is also required to handle demand changes. 

These variations could occur as a result of increased payment transaction volumes during certain times of the day, changes in market circumstances, or policy changes by the government. Furthermore, the infrastructure had to deliver the consistency that Paytm and its merchants needed to manage e-commerce services constantly.

Threats to Paytm

Environmental variables that can harm a company’s growth are known as threats. Paytm’s threats include the following:

• Competition: Paytm is up against stiff competition from platforms like PayU, Razorpay, PayPal, and others, all of which are vying for the same market share as Paytm. Paytm has always been vulnerable to competition and will continue to be so in the future.
• Fraud & Hackers: When we consider the scope of the company’s operations, we find that it operates in over 3 nations. It also poses a significant security risk from hackers throughout the world.
• Strong Economic Regulations & Policies: Some nations, such as Taiwan, China, and Japan, have rigid rules and regulations that make it difficult for corporations like PayPal to set up shop there.

Failed Campaigns of Paytm

1. Paytm Payments Bank Controversy: In 2018, Paytm Payments Bank found itself embroiled in a controversy when the Reserve Bank of India (RBI) ordered the bank to stop onboarding new customers temporarily. This was due to concerns over the bank’s KYC (Know Your Customer) processes and adherence to regulatory guidelines. Paytm Payments Bank was required to make certain changes and improvements to its operations to comply with RBI regulations.
2. Paytm’s IPL Sponsorship: In August 2020, Paytm lost the title sponsorship rights for the Indian Premier League (IPL) cricket tournament to Dream11. Paytm had been the title sponsor for a few years prior. This was seen as a significant setback for Paytm as the IPL is one of the most-watched and lucrative sporting events in India. The loss of sponsorship rights was attributed to the financial impact of the COVID-19 pandemic and reportedly a disagreement over sponsorship fees.

Top 5 Competitors of Paytm

1. PhonePe: It is a popular digital payment platform in India. It offers a range of services, including UPI-based payments, bill payments, and mobile recharges.
2. Google Pay (formerly Tez):  It is another major player in the Indian digital payments market. It is known for its UPI-based transactions and integration with various Google services.
3. Amazon Pay: It is Amazon’s digital wallet service, which allows users to make payments on Amazon and various other partner websites and apps.
4. FreeCharge: It is a digital wallet and payment app that offers various services, including mobile recharges, bill payments, and online shopping.
5. MobiKwik: It is a digital wallet and payment platform in India. It provides services such as mobile recharges, bill payments, and digital wallet features.