What Exactly is Paytm and How Does it Work

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

Here’s now the step by step simple explanation to those lads who are curious to know the Paytm’s working mechanism.

1. What is Paytm?

Paytm, shortened form of ” Pay Through Mobile ” is currently 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. H

owever, 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 store digital money and later use it for future purchases. It is safe, secured 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 utilise 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 amount is deducted from our credit card, debit card, netbanking etc, mode of payments then it automatically get stored in our Paytm wallet.

3. How Paytm wallet works?

Paytm wallet acts as a prepaid mode of payment as well as a refund mode. Sometimes when your recharge does not get successful due to some technical issue, if the money is debited from our credit card or debit card, it is automatically refunded to our Paytm wallet.

The stored amount can be utilised for future purchases or in case you want it back to your credit card or debit card, you can also initiate refund back to your source.

4. How Paytm recharge works

Believe us it is very easy, even for a person with little knowledge about internet, to understand the working mechanism of Paytm. However, technically, it is 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 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 actually tickets, provided by a bank in which we have an account, that allow 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, 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 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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