Khatabook is one of India’s most popular digital ledger apps for small businesses. It replaced the traditional bahi-khata with a mobile-friendly tool that helps shopkeepers track credit, send payment reminders, manage customers, and record daily transactions. Millions of kirana stores, service providers, and small merchants use the app daily.
The interesting part is that Khatabook is free for most users. So how does the company actually earn money? Let’s break it down.
The Core Idea Behind Khatabook
Khatabook was created with one goal—to help India’s small businesses go digital. Many shopkeepers rely on cash transactions, handwritten notes, and physical diaries to track their business. This often leads to:
- Credit losses
- Missed payments
- Confusion during billing
- Inaccurate records
Khatabook solves these problems by offering:
- Digital credit ledger
- Automated payment reminders
- Customer balance tracking
- Business insights
- Online payment collection
The app became popular quickly because:
- It is free
- Works on any smartphone
- Supports local languages
- Saves time and reduces losses
Once Khatabook gained a huge user base, it started building revenue streams around the ecosystem.
How Does Khatabook Make Money?
Khatabook earns money through several channels—financial services, payment solutions, subscriptions, merchant tools, and credit-related products. Here’s a detailed breakdown.
A. Payment Gateway Fees (Primary Revenue Stream)
One of Khatabook’s biggest income sources is its digital payments feature. Merchants can collect payments through:
- UPI
- Cards
- Payment links
- QR codes
Khatabook charges a small fee on certain transactions (mainly on card or wallet payments). Even though the fee is small, the massive transaction volume brings strong revenue.
This model is similar to PhonePe and Paytm wallet charges.
B. Lending & Credit Products (High-Revenue Segment)
Khatabook works with banks and NBFCs to provide small-ticket business loans to merchants. Since Khatabook has detailed transaction data of users, it can:
- Evaluate their creditworthiness
- Recommend eligible loan options
- Minimize risk
Khatabook earns through:
- Commission fees from partner banks
- Revenue share from approved loans
- Interest spread in some structures
This is one of the most profitable parts of the business because small merchants often need working capital loans.
C. Ads & Sponsored Promotions
Khatabook offers brands access to millions of small merchants. Businesses like FMCG companies, fintech brands, payment apps, and wholesalers pay Khatabook for:
- In-app ads
- Sponsored product placements
- Brand campaigns
- Featured offers
With so many active users, Khatabook’s advertising inventory is highly valuable.
D. Premium Subscription Tools (Khatabook Pro)
While most features are free, some advanced tools are paid, such as:
- Business analytics
- GST invoicing
- Advanced reports
- Multi-device access
- Inventory management
Merchants pay monthly or yearly fees for these premium features. Subscription revenue brings predictable and recurring income.
E. Storefront & Catalog Tools (Digital Dukan)
Khatabook allows merchants to create a simple online store where they can:
- List products
- Share catalogs on WhatsApp
- Accept orders online
Khatabook charges:
- Subscription fees for premium storefront tools
- Convenience fees on certain transactions
- Paid add-ons for advanced features
As more small businesses shift online, this segment continues to grow.
F. Merchant Services & SaaS Tools
Khatabook offers extra business tools such as:
- Billing / POS features
- Inventory systems
- Staff management tools
- Vendor management
- Automated reminders and SMS services
Some of these tools come with fees, while others are bundled with premium plans. SaaS income is stable and scalable.
G. SMS Charges & Transaction Notifications
Merchants often pay for:
- Extra SMS reminders
- Bulk customer messages
- Business notifications
These paid SMS features bring micro-revenue that scales with millions of users.
H. Affiliate Commissions
Khatabook earns referral fees when merchants sign up for partner services such as:
- Insurance
- GST software
- Payment gateways
- Digital tools
- Accounting services
These affiliate partnerships add an additional income layer with almost no extra cost.
Why Khatabook’s Business Model Works
Several factors make Khatabook successful and widely adopted.
a. Huge Target Market
India has over 6–7 crore small and micro businesses—most of them unorganized. Khatabook taps into this massive segment.
b. High Trust & Frequent Usage
Merchants open the app several times a day, building habitual engagement.
c. Strong Data Advantage
Daily transaction insights help Khatabook build financial products with lower risk.
d. Freemium Strategy
Basic features are free, helping the app acquire users quickly. Revenue comes from advanced features and value-added services.
e. Growing Digital Payments Ecosystem
As more businesses adopt UPI and online payments, Khatabook’s payment solutions become essential.
Challenges Khatabook Faces
Even with strong growth, Khatabook deals with:
- Competition from OkCredit, Vyapar, BharatPe, and PhonePe for merchants
- Low willingness to pay among small shopkeepers
- Cost of customer acquisition in smaller towns
- Need to improve monetization while keeping the product free
However, its large user base and strong financial partnerships keep it in a good position.
Conclusion
Khatabook makes money through payment gateway fees, loan commissions, advertising, premium subscriptions, SaaS tools, SMS charges, storefront services, and affiliate partnerships. Its freemium model helps it attract millions of merchants, and its fintech offerings help convert that user base into sustainable revenue.
