Digital payments are not driven solely by cash backs any more, they are now convenience centric, said Paytm founder and CEO Vijay Shekhar Sharma, in an interview. The mobile payments firm has stopped offering cash backs to ‘repeat’ customers. Paytm, backed by Japan’s Softbank and China’s Alibaba, has seen a fourfold rise in monthly transactions to 200 million, since demonetisation.
What kind of growth have you seen in usage post demonetisation?
Before demonetisation, we used to see about 50 million transactions a month. A year after demonetisation, we are seeing about 200 million transactions a month… which is a growth of four times on an average number basis. In between, there was a point where we had crossed 260-270 million monthly transactions. But what demonetisation did is not about this. The mindset of the people has changed. There is a shift… we are moving away from being cash-first. Today, if you don’t have cash, and you need to pay somebody, they will simply say why don’t you paytm me? I believe, we have become part of the mainstream and that I think is pretty incredible.
How do you respond to people who say Paytm has been the only beneficiary of demonetisation?
I don’t think so. Every payment instrument saw at least two-fold growth. We have put in a lot more resources. We had placed our bets that the mobile payments in this country will become big, and we did that in 2014. The market took three years to mature. We have spent ₹5,000 crore alone on payments in this country and that is a really large investment. And we have been doing it every year consistently. Neither the year of demonetisation was extraordinarily large, nor post that we have spent more. We have been spending consistently year on year that amount. What demonetisation did was it accelerated consumers to understand the use of mobile payments.
Has the profile of customers using Paytm changed?
Yes, it has. Earlier, customers were English-speaking and smart phone users. Now they are from every stratum of life, and not necessarily English speaking. Today, we have a large number of people accessing Paytm in vernacular language. Our regional app was launched post demonetisation and now 20% of our customer base is using regional language.
How about in terms of usage and the money kept in the wallets?
That has changed quiet a lot too. The value of money kept has gone up... earlier in 100s, now it’s 300s-400s.
Have you seen discounts and cash backs coming down?
For us, they did come down. Customers now don’t pay using phone only for cash backs. From being benefit centric, digital payments have become convenience centric. For large goods purchases, people bother about cash backs, but for smaller transactions they don’t. If you look at more than ₹5,000 transactions, people are expecting cash backs, but not for those worth ₹100 or ₹50.
So cash backs are no longer driving the wallets?
Cash backs are a bait to acquire new customers. Paytm has stopped giving cash backs to repeat users. That is a fact.
Are you happy with the 4x growth you have seen?
Like I said, we touched 270 million at one point, and have now settled at 200 million transactions… the consumers have learnt what mobile payments can do and the journey from cash to digital has accelerated like never before. I am personally very happy that now many know, so that many others can know… There is a network effect like a consumer asking a shopkeeper to start accepting Paytm or a merchant asking users to pay using Paytm. Industry no longer needs to teach what this payment method is and how it works. Industry is now in a growth mode and can work on building other use cases and how new customers can be acquired.
With stricter KYC norms for wallets, do you see users moving to Paytm Payments Bank?
We do see that. In a way, this is an accelerator program for us. We are seeing 97-98% of wallet users opening bank account with us. From user point of view, we will tell them to open a bank account with us because moving money between our wallet and bank account is seamless. RBI has allowed unlimited money transfer between your own bank and wallet. We want to offer it as a value. We want every customer to move from wallet to our bank.