How Mobile Wallets Companies Earns?


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Mobile wallets have made cashless transactions extremely convenient and hassle free. As a result, more and more people are adopting the digital wallet system for accepting and making payments. After demonetization, even the small street vendors have started using digital wallets.

However, what we often ponder over is how exactly do the mobile wallets companies earns? Especially when they are offering up to 50% to 100% cashback. Let’s get a little deep and understand the revenue model of the digital wallet companies.

The business model of Mobile Wallets

Most of the leading digital wallet companies primarily work on set business models, i.e. the recharge business, bill payments, digital wallets, and the E-commerce business. Nearly every digital wallet company started off by providing recharge services first. Eventually expanding to offer bill payments, digital wallets, and finally E-commerce businesses.

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For every recharge done through the digital wallet companies, the company earns a commission of around 2% from the respective operator. For instance, if you recharge your DTH connection and mobile number through Paytm, then Paytm will get a commission from your mobile network and DTH operator.

Similarly, for bill payments like electricity, water, or even educational fee. A digital wallet company receives a commission from the respective service provider.

Further, in respect to the E-commerce business, the digital wallet company offering this service earns commission on every sale. Which means that the wallet companies get the commission on the total value of the sale of a particular product from the brand or seller. The percentage of commission varies on the type of product and ranges from 0% to 20% of the sale.

How do the digital wallets work

To understand how the digital wallet companies make money, let’s take the case of Paytm. The money deposited by the users in the Paytm wallet. Further, deposited by Paytm in an escrow account with a particular bank. An escrow account works like a holding tank, which keeps the money for the time being.

The deposit in the escrow account fetches Paytm a specific rate of interest which is pre-decided by the bank and Paytm. Hence, the more we use Paytm wallet, the more interest Paytm would earn for the deposit.

Other ways digital wallet companies make money

  • These companies charge a monthly fee to the sellers. For providing them with a market platform to showcase their products
  • Digital wallet companies also earn from advertising, where the firms/companies posting ads on the website of the wallet. Companies pay them for letting them advertise on the website
  • Digital wallet companies also earn through collaboration, like FreeCharge and Snapdeal. Where the consumer can migrate from one website to another. For instance, wherever a customer migrates from FreeCharge to Snapdeal, Snapdeal will pay FreeCharge a commission
  • If a customer uses his/her debit/credit card on any digital wallet website, the bank pays a specified fee to the wallet companies
  • Some sellers launch their products exclusively on the website of the wallet companies and give them a good share in the profits

Though the digital wallet companies might not be earning a huge sum of money through their services, they are not in losses too. It is just the beginning of the digital era as the government and the private companies both are pushing and encouraging the cashless transactions and making available the best of digital services to the consumers.

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