While it took Paytm nine months to add the first 0.5mn offline merchants (1,696/day) to its platform, it took just the last two months to add 0.5mn more (or 8,929 merchants/day). Much of the boost in merchant additions can be attributed to the demonetization of Rs500 and Rs1,000 notes by the Indian government on November 8, 2016, which possibly propelled merchants to accept non-cash form of payments.
Although the data for installed card POS machines for the last three months has not yet been released by RBI, the pace of merchant additions/day for card POS machines even pre-demonetization (from Jan-16 to Sep-16) was 40% lower (at 1,030/day) than Paytm. POS additions in the recent past (Aug-13 to Dec-15) were even lower at 310/day.
Paytm uses a zero cost QR code-based POS solutions for its offline merchants vs. cards, which requires a merchant to buy a POS machine. Merchants can accept payments from customers into their Paytm wallets through a QR code scan, which can then be transferred to their bank account by paying a 1% transaction fee (which is currently waived off as a promotional offer). For debit cards, transaction fee is ~1% (depending on volume), while for credit cards its higher at ~1.5-2%.
