According to a Statista ranking, India is the fourth largest producer of unicorns in the world. Indian start-ups and fintechs have succeeded in establishing themselves in a market dominated, for the most part, by American and Chinese companies. Paytm (mobile payments) is the first Indian unicorn to shake up its competitors. Ambitious, the startup plans to support half a billion Indians in their digital transformation thanks to its payment gateway, which has already revolutionized the daily lives of over 300 million users.

What is Paytm? How did the startup become India's first unicorn? Who are its main investors? We take a closer look at the company, based in Noida (a suburb of Delhi) and famous for having achieved India's biggest-ever IPO.

Paytm: India's online payment company

Paytm is an Indian company specialized in digital payment and financial services.. Founded in 2010 by Vijay Shekhar Sharma under One97 communications, the company's parent entity (2000). With more than 300 million users who use the platform to pay online or in-store, it has become the benchmark digital payment solution in India.

An acronym for "pay through mobile", Paytm is equivalent of PayPal in India. Like its American counterpart, it offers mobile payment services to Indian consumers, and at the same time enables merchants to receive payments with just a few clicks of the mouse.

In addition to mobile payments, Paytm also offers a variety of financial services. Here is a non-exhaustive list: 

• microcredit 
• a BNPL system buy now pay later (buy now pay later)
• payment of invoices 
• money transfer 
• retail brokerage products 
• online games

Since its foundation in 2010 with an initial initial investment of $2 millionthe company has come a long way. Over the years, the Indian FinTech turned unicorn has established itself as a genuine player in an already ultra-competitive market. First, with the creation of a prepaid mobile and DTH (Direct To Home) platform, but also with the development of the digital payments and financial services company we know today.

Why is Paytm so popular in India?

In 2010, Paytm's arrival in India was like a thunderclap. 

As a reminder: India, like many parts of the developing world, is a country where most transactions are cash-based. There are few (if any) large retail chains and stores. The majority of Indian commerce is carried out by the few square-meter stalls known as "kiranas". Structured commerce accounts for just 10% of the country's market. In short, Paytm has taken a crazy gamble in launching its project: to digitalize the Indian population by introducing them to online payments. In a country where electronic payment was virtually non-existentit was a daring move.

And yet...

Since its launch in 2010, the online payment app has been a resounding success, growing rapidly to the point where it now registers more than 1.2 billion monthly transactions. This represents more than 35% of all digital transactions in the country.

The Indian payment gateway has played a major role in the digitization of financial exchanges in India. In recent years, as it has grown, Indians have been able to make the opportunity to make purchases and transactions onlineonline. And everything goes: transport, food, catering, bills... In the end, Paytm has succeeded in contributing to the digital transformation of its country. This transformation has largely been made possible by the democratization of online payment.

2016: a key year for India's mobile payment platform 

Paytm was already well established nationwide. But November 2016 was to mark a turning point: Narendra Modi, the Indian Prime Minister, announced a far-reaching demonetization: all 500 and 1,000 rupee bills lost their validity (they accounted for over 86% of cash in hand).

In order to get their money back, the Indian population has no choice but to deposit the old bills in their bank accounts to obtain new cash.

Problem: production of new banknotes is insufficient and cash is running out. The country experienced a liquidity crisis, at the time, most transactions were still carried out in cash.

Paytm jumped at the chance to promote itself. Jackpot: according to Deepak Abbot, vice-president of the group, between November and January, the number of customers exploded to over 200 million. Transactions are approaching 7 million daily. In short the Paytm machine is up and running.

How did Paytm become India's first unicorn?

Prior to its "memorable" IPO in 2021, Paytm has rapidly acquired unicorn statuswith the help of world-renowned investors.

Warren Buffet. This is the name to remember. The businessman, investor and multi-billionaire has contributed enormously to making Paytm a unicorn, including India's first unicorn.

It was in August 2018, following the creation in 2015 of a branch focused on e-commerce (PayTM Mall) that the billionaire's investment fund, Berkshire Hathaway, decided to invest $306 million in the online payment solution.

But even before him, investors were interested in One97, Paytm's parent company. 

• In 2015, Alibaba and Ant Financial, 2 companies owned by Chinese businessman Jack Ma, invested almost a billion dollars.
• In May 2017, Softbank injected $1.4 billion into One97 Communication. 

Paytm's turbulent IPO

Paytm's listing on the Bombay Stock Exchange was to be largest ever in India.

At the beginning of November 2021, it was all over the news. Paytm was due to list on the Bombay Stock Exchange, and was looking to raise $2.46 billion through the IPO.

On November 18, just two weeks later, the payment platform went public, monetizing its extensive database (333 million users and 21 million merchants). A week earlier, Paytm had already raised the equivalent of almost 960 million euros from investors such as the BlackRock investment fund.

Unfortunately, all these efforts were not enough, as the online payment specialist's shares ended their first day of trading on a 27% fall.

Paytm Payment Bank to be blocked in 2022

Despite a mixed initial public offering, Paytm never gave up and even managed to move forward. But in March 2022, another debacle. The RBI (Reserve of Bank of India) prohibited Paytm Payment Bank - a service developed by Paytm - from accepting new customers, pending an IT audit of the solution. The Indian unicorn found itself in a compromising situation, as it was accused of supervision problems. In the immediate aftermath, the share price of the parent company, One 97 Communications, plummeted by 12% per share to an amount nearly 70% below the company's initial public offering (IPO) price in November 2021.

What can we expect in 2023?

On the financial front, nothing good for Paytm. At the beginning of December 2022, the Indian financial services company confirmed that it was studying the possibility of buying back its own shares following a turbulent and questionable year on the stock market with the share price dropping by +60%.

Paytm plans to convene its Board of Directors in mid-December to make a decision.

Nevertheless, share buy-backs are not uncommon and are generally seen as a way for companies to reward their shareholders! However, this is not a reassuring attitude for loss-making companies. As a result, it's hard to predict Paytm's future. The company's dream of a historic IPO in India has been dashed, with its share price plummeting 65% and never recovering to its IPO price of $25.2. 

Paytm: key information 

By 2022, Paytm will have nearly 10,000 employees worldwide.

Paytm sales were not disclosed. However, according to Statista data, parent company One97 Communication generated $322 million.

Paytm was set to go public in November 2021. All the lights were green. However, what was supposed to be a consecration for the Indian tech ecosystem turned out to be a fiasco. On its first day on the stock exchange, the Indian online payment specialist fell by 27%. This was due to an uncontrolled desire to carry out the biggest Indian IPO in history. 

Paytm's mission has not changed since its inception. The Indian online payment company wants to be a major player in the digitalization of its population. To achieve this, it aims to integrate half a million Indians into the mainstream economy through payments, commerce, banking, investment and financial services.

Weak/limited. Since its IPO in November 2021, Paytm has faced a number of difficulties that have weakened its financial health. Nevertheless, the company is sticking to its objectives and continues to develop its business in India and make its solution available to the rest of the world.

We will bring half-a-billion Indians to the mainstream economy. "We will bring half-a-billion Indians to the mainstream economy."