Case 2 – Identifying customer needs – Paytm

As discussed in the previous case, we learned how Airbnb created an MVP product. This MVP helped them come up with a product that customers wanted. These iterations are very important in the lifecycle of the product. A brilliantly thought, designed and implemented the product, solving no customer needs is as good as a non-existing product.

It is important to weigh your product against what customer wants continuously. Therefore, it is very important to launch your product in phases and keep gauging the customer needs. There is always a trade-off between time to market and how perfect the product is. The more time you spend on the product the better it will be but at the same time you might end up launching it late. In the meantime, your competitor might launch a product and people might get used to it. This will then make it difficult to shift customers from an existing product to yours. Hence, it’s very important to launch the right MVP. MVP should not take a lot of time to market and at the same time should also serve the customer needs.

Let’s dive into another case. This one is of a company whose number of customers sky-rocketed in a very short span of time.

Case 2 – Paytm

Paytm v1 – understanding the customer need

Everyone now knows Paytm for its wallet. But many don’t know that it didn’t start off as a wallet company.

Paytm was created for making payments online. Its name was basically chosen as Paytm as its short form of Pay through Mobile. The idea was to create a product which would provide convenience to customers for payments. India was already having a boom in the number of smartphones which customers were buying. Therefore, if you could come up with a way to have payments via those, it could definitely provide convenience to users.

One of the things which almost every customer of India was paying for was mobile recharges. Almost everyone had to recharge their mobile or pay their bill. It was highly inconvenient to do the same offline – either you had to stand in long queues or you had to search for some nearby small store to do so. In case you plan to do online, you would have to visit the operator’s site. So in case you are paying for more than 1 phone number from multiple operators, you would have to go to multiple sites and make payment.

This is the gap that Paytm decided to fill to start off. With One97 communications already running, they had the advantage of relationships with telecom providers. This helped them to come up with a product where could just come and pay for their mobile bills/recharges. The product was launched with very basic and provided customers an easy way to recharge. This product helped them get the penetration into customers mind.

The important things here to learn are below –

  1. They understood the customer need. The pain a customer has to go through to complete a bill payment or recharge.
  2. They launched a very basic product which just allowed customers to do recharges. Nothing fancy was required to validate the idea.
  3. Paytm also made sure that they didn’t take a lot of time to go to market.

Paytm Recharges MVP

Paytm v2 – building on top of MVP

Once Paytm was able to establish that customers are finding value in the product, they decided to take it further. They started other payments on their platform such as DTH etc. Influenced from Alibaba in China, Paytm decided that they should try and create a wallet system. This would allow customers to preload their money and use it for paying to merchants.

Let’s try to put this thinking into the context of what Paytm was doing. They already had solved the problem of making payments easier via mobile. But one problem still remained – each time to make a payment you had to enter your card details and then either enter OTP or your login password to complete the payment. This is where a wallet would be of great help. Customers could load enough money into their wallet and then complete 4-5 transactions directly via it. They would not have to go through the hassle of putting card details multiple times.

Paytm Wallet

Paytm understood what their customers do and what is the pain point of theirs. They understood the customer journey and also different scenarios for which customers were using Paytm.

When we talk about Paytm wallet, the biggest use case has been money transfer between users. This transfer has been made so easy. But you might be surprised to know that when Paytm decided to build their wallet, they didn’t even have P2P (peer-to-peer) transfers as the priority. Their focus was only on to create a channel for adding money into the wallet and then again taking it back to the bank. Now you might think why to focus on this, this is not even the selling point. The reason is that when you build a product it is very important to have a very strong base to it.

The base to wallet was that customers are able to add money and take it to the bank with a high success rate. P2P was an offering of wallet. Once the foundation was strongly laid, Paytm could offer P2P very easily. This then solved a lot of customers problems.

Not having the change to pay was one of the other big problem customers used to face. With P2P, people could transfer amount among each other easily. They didn’t have to worry about change anymore.

What are the learnings that we can take –

  1. Customer journey understanding is very important to further improve and innovate your product.
  2. When you plan to launch a product, its important that while you are working on it, a strong foundation is laid. A strong foundation allows the product to scale up easily and be robust in nature.
Paytm v3 – the offline mode

The next innovation which Paytm will always be remembered for is the QR. By launching wallet, Paytm had already shown that payments, on the whole, could be simplified. But the next big gap they saw was on offline stores. They realized that debit/credit cards, on the whole, were growing in the country. There were customers who would want to pay via cards and at the same time, there were stores who would want to accept the same. However, the cost of the same was high for both.

Card payment needed a connection at the merchant’s end to complete the transaction. Not every store could afford the machine and not every store had an internet connection. What was required as a solution here was something which was offline. However, most customers had internet access with them. So a solution where the customer had to be online while the merchant can be offline was needed.

Paytm launched QR. A customer had to just scan QR code and then pay. The merchant would receive an instant SMS confirming the payment and the amount received. They again brilliantly identified the gap in the market which was existing for so long and no one had tapped into.


Many people say that Paytm got lucky with demonetization. Maybe they did, but what we should appreciate is that they always identified the market gaps brilliantly. They always made sure that they act on the gap fast. They launched good MVP’s to cover the market needs.

Currently they one of the biggest payment company of India. They offer almost everything on their app. Even now they have a brilliant product strategy. With everything in one single app, they are able to up-sell and cross-sell different things to customers easily. This helps them improve their GMV, revenue and eventually profitability.

There are a lot of lessons which one can learn, but most important are –

  • Customer need identification via customer journeys and scenarios is very important.
  • MVP has to be launched into the market fast but should cover basic needs of the customer.
  • If the foundation of the product is strong it will always be robust.
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