How Does Paytm Work

Scott Belsky, Behance founder, in one of his popular quotes says ” It’s not about ideas rather it’s about making ideas happen “. This quote from Mr. Belsky had a ripple effect on Vijay Shekar Sharma when he launched Paytm in the year of 2010 to transform the way Indian cellular users recharge their cellphone and DTH balances.

If you are one like many those lads who curiously seek a deep explanation of the working mechanism of Paytm, then read on…

1. What is Paytm?

Paytm, a clipped form of ” Paytm Through Mobile ” is one of the fastest growing Indian online marketplaces in the business to customer retail space. Paytm originally kicked off as a platform that allows Indian cellular customers avail online cellphone and DTH recharge services. However, later in 2014, Paytm, in addition to providing recharge facility, decided to become diverse and sell consumer goods online as well.

2. What is Paytm Wallet?

Paytm wallet is nothing but your digital or electronic account, which automatically gets created while you sign up on Paytm website. It allows you to store digital money and later use it for future purchases. It is safe, secure and legally accepted form of account.

Just like you deposit and withdraw money from your savings account when you need it, similarly Paytm wallet gives you the ability to store your money in digital form and later utilize it when the need of purchase arises.

Sometimes while we try to recharge our mobile balances, payment counters failure due to technical errors or any other reason. If the amount is deducted from our credit card, debit card, net banking, etc, mode of payments then it automatically gets stored in our Paytm wallet.

3. How Paytm wallet works?

The money available in your Paytm wallet has real value as you can use it for online shopping. Sometimes, although it happens very rarely, if you counter an unsuccessful recharge for some technical fault, you will get a refund back to your Paytm wallet in case money was debited from your bank account. The refund is automatic. You also have an option to get the money back from your Paytm wallet back to your credit or debit card.

4. How Paytm recharge works

Believe us it is very easy, even for a person with little knowledge about the internet, to understand the working mechanism of Paytm. However, technically, it is a bit complex.

For gaining a satisfactory understanding, you must learn about the components that reinforce and make our cellphone and DTH recharges possible on Paytm. Let’s get started.

1. Cellular companies

Cellular companies such as Airtel, Aircel, Idea, Jio Reliance, etc is one of the three components of Paytm’s recharge mechanism. We all know that these cellular companies provide us and you a range of services such as voice, data packs, wireless, etc for a certain amount of money.

We will only be able to call our friends, families, etc and surf internet provided we maintain enough balances in our cellular accounts. To put it in a simple way, we need to recharge our cellphones numbers to avail and enjoy services like call facility, web browsing, etc. Prepaid users no longer avail and use such services once their mobile balance gets exhausted.

2. Banks

Banks represent institutions that enable us to create accounts such as savings account, current account, etc and save our hard earned money in them. We are allowed to use the money stored in our bank accounts through cheques, debit cards, credit cards, net banking, etc.

These cards are actual tickets, provided by a bank in which we have an account, that allows us to shop online & offline, recharge our mobile balance, etc When making an online purchase, we require to enter card details and confirmation text messages on the payment page of a particular portal.

3. Paytm

Paytm actually acts as an intermediary or simply a broker that connects cellular users and banks. Paytm website is internally integrated with a payment gateway, which in turn is connected with payment gateways of several banks such as ICICI, HDFC, SBI payment gateways.

When a user visits on Paytm, he is asked to enter his mobile number and the amount to be recharged. Post this step, the user is automatically routed to the payment gateway interface where he needs to enter his credit or debit card details and then receives OTP from banks to confirm the transaction.

The amount which the user entered is automatically deducted from his or her bank account. The amount is transferred to the account of cellular service providers by Paytm and a result the recharge of that user is initiated. Paytm at the end of the transaction earns a commission. This is how does the Paytm recharge work.

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