Delhi NCR-based payment and commerce company Paytm has grown into becoming the biggest fintech startup in the country. The late last year demonetisation announcement of the Indian government worked wonders for the company, making it a leading player in India's digital wallet space with over 160 million users.

While Paytm might be winning laurels in the country for its work, the R&D arm of this hyper-growth Indian financial technology called the Paytm Labs is actually based out of Toronto, Canada.

Paytm setup Paytm Labs in the year 2014 when the company had grown to lot of merchants, and its users were using the wallet primarily for making bill payments. Encouraged by this, the company aimed to get as many new merchants possibly on the platform—a majority of whom were based in the United States who wanted to sell their products/services to the people of the second largest population on Earth.

In an interview to, Harinder Takhar, the leader of the R&D arm, explained the aforementioned scenario by giving the example of US-based taxi-hailing service Uber. He said, "You want to launch Uber in India, but users cannot save credit cards—there’s a regulatory limitation. So Paytm Wallet works very well, because we can actually do a one-click disbursement." He also added that this one of the various reasons that the Indian startup decided to set up a facility in Canada so that someone from the company is constantly here to work on partnerships like these.

Harinder Takhar is a Blackberry alumnus who worked as the parent company’s first CEO for three years before shifting base to Canada. He's currently leading Paytm Labs' 50 members team which consists of engineers, developers and data scientists—one of whom has formerly worked at CERN, the European research facility popular for discovering the Higgs Boson particle.

According to Takhar, Paytm Labs was set up with an aim of building better data centric products. Since Big Data was a buzz word in the year 2014 with everyone talking about what is it and what all can be done with it; Paytm also wanted to explore what the term can mean to the company. Since London, New York and Toronto are widely considered as the top three banking financial centre points in the world, Paytm narrowed down on Toronto to set up its R&D centre and explore the talent pool there.

In the initial days, Paytm Labs thought that they would do reporting i.e. Inform every business about what all is going in the industry, for example, how iOS is doing much less transactions than the Android version, and so on. But very soon in their journey, they realised that they will have to start at a very different scale than doing this incremental thing. This is when they decided to create Datalake, an internal software tool that keeps every data piece across the company in one place, so that it can be easily accessed and analysed.

The very first thing that Paytm Labs worked on was fraud prevention. By that time, Paytm was already doing over a couple of million transactions every day. Out of those two million, about twenty thousand are most likely to be bad transactions. But, finding those bad transactions was almost similar to finding a needle in a haystack. This is why Paytm Labs built an internal tool called ‘Maquette,’ which is capable of finding out whether a transaction is good or bad. It can be thought of as a credit score against a transaction, designed in real time.

After Maquette, Paytm Labs worked on ‘Midgar,' which aimed at providing a more personalised experience to Paytm users. When one goes to shop ok Paytm, the app recommends a bunch of products that are most likely to appeal to the person. This recommendation list takes a lot of computation effort and a deep understanding of what the customer is like, his likes and dislikes based on previous choices and so on.

The labs have also built an internal score for every buyer called as the ‘Karma Score’ internally. It’s sort of a credit score equivalent, because India doesn’t have a very strong credit score system. The score can be used for fraud, and for arbitration in the customer care team.

According to Takhar, the idea for Paytm Cash Wallet came to Paytm Labs when during their mobile recharge days, some transactions failed. For these minor percentage of failed transactions, the company would adopt the chargeback way, but that would take up to 21 days to reach the user. During these 21 days duration, they would get many angry calls, message and emails from the users. This is when they decided to make a digital wallet, park the failed transaction money in the wallet and then give the users the option of either retrying the transaction or get the money back in their bank accounts.

Today, Toronto-based Paytm Labs, which has built all of Paytm's data products that are ‘live’, is responsible for organising all of the Paytm’s data assets.

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