In my +5 years of using PayTM, PayTM has never asked me to add money to my PayTM wallet. But PayTM is a digital app working under a digital business model, so it can jolly well show different menus to different users and follow different practices with different users (within reason, of course).

So, if PayTM asks you to add a wallet balance (“topup”), be aware that you can ignore the “ask” and still use PayTM for making payments.

PayTM works directly off of credit cards on file and bank account via Card Rails and UPI Rails respectively. Just that these payments are subject to two factor authentication for each and every payment. For the uninitiated, 2FA comprises CVV & OTP / VbV / MSC in the case of Card Rails and Device ID & UPI PIN in the case of UPI Rails. 2FA introduces friction, causes risk of failed payments, and kills conversion. More in Why COD Still Rules Ecommerce In India.

To mitigate those problems, PayTM offers another mode of payment which works directly off of its wallet balance. It’s to use this “Wallet Rails” that PayTM asks users to add money to its Wallet – obviously wallet payments can’t happen if wallet balance is zero. Wallet Rails payments are not subject to 2FA, hence frictionless, convenient and deliver high conversion. Technically, you must enter the PayTM password for every Wallet Rails payment but, because they’re inevitably logged in to the app permanently, PayTM users rarely need to enter the password for individual transactions, so PayTM’s Wallet Rails sidesteps that friction hotspot.

Of course, 2FA is still required to topup the PayTM wallet from time to time. But the friction therefrom can be mitigated by doing bulk topups from credit card / bank account on file to cover multiple merchant payments.

For example, if you need to make five payments of 2K each, when you use PayTM via Card and UPI Rails, you’d need to go through 2FA five times. But, when you use PayTM via Wallet Rails, you can topup your wallet with 10K in a single 2FA transaction and avoid 2FA for the five individual 2K payments.