The Monday mindset: 8 May 2017

Let’s WeChat

Fintech zeitgeist! Every Monday, we might look back at last week; look ahead to this week; share a few thoughts (our own or others); or discuss anything that catches our eye.

This week, Soumik Roy asks – will Paytm become India’s WeChat?

Ever since demonetisation, electronic payments in India have been all the rage. In the metro cities, taxis, mom-and-pop stores, and even hawkers accept some form of electronic payment.

At least, they claim to, when surveyed at random – but it’s not necessarily true.

I live in Mumbai and travelled to Delhi, Chennai, and Bangalore last month. In each of these, I went looking for munchies at some point. I looked for reasonably large mom-and-pop stores that were somewhat less crowded so I could talk to the person behind the counter while I made my purchase.

Here are three things I learned/observed:

1. I visited at least five stores in each of the four cities, all of who said they accepted electronic payment in one form or another. However, at least one store in each city refused it. Usually, it was because the person who could accept payment to an electronic wallet wasn’t around and the attendant who was at the counter didn’t know how to make it work. Some even established a threshold value for accepting electronic payments – INR 500 ($7.8) for Mumbai, INR 300 ($4.6) in Bangalore, and INR 1,000 ($15.5) in Delhi from my experience.
2. Paytm is a very popular electronic wallet. Almost all of the vendors I met had heard of Paytm, had the app and used it to make payments, and most accepted payment on the app.They seem to be getting their marketing right. To build their brand, for example, they put out a full page advertisement in leading Indian newspapers featuring the Indian Prime Minister – although condemned as a marketing tactic in poor taste and under investigation by the Government. To increase adoption, the e-wallet has tied up with Mars in India to offer an INR 20 ($0.30) cash-back to those who buy a Snickers bar.

If you hadn’t noticed, Paytm is becoming something like WeChat in China. You can book tickets for movies, reserve seats on buses, trains, airlines, and hotels, shop for electronics, and even invest in gold. It’s truly building an ecosystem around its payment platform – and this is huge. Pay attention to this. Pay attention.

3. Debit and credit cards still beat Samsung Pay, UPI (Unified Payments Interface), and even Paytm. There are fewer technical glitches, the machines are easy to use, and they’re just way more convenient. From a vendor’s perspective. That’s my understanding. From a consumer’s perspective – all we do is scan a QR code to pay into the e-wallet, but vendors struggle with training their staff and making sure they know what to do in case a transaction fails. Personally, I really wish Samsung Pay picked up in India. It transforms your phone into your credit card, and spares me the trouble of keeping track of and reconciling the different wallets and accounts I hold at the end of the financial year.

There was no Monday mindset last week due to a UK public holiday, but two weeks ago a billionaire leaving Japan was discussed. Yes, really.

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