Imagine this –
You are damn hungry and walk into a Juice Shop.
You order a freshly made juice of Egyptian oranges and multi-grain cheesy grilled sandwich with chopped olives and jalapenos.
After finishing up the tasty sandwich & the fresh juice, you take out your phone to pay for the order and point at the QR code.
Which app are you using to make the payment?
It could be PhonePe, Google Pay or If you are like me then it will be PayTM.
You are most likely to see the QR code of PayTM, PhonePe or BharatPe because they are fighting really hard to be there.
The Biggest Challege of the Payment companies
It is really tiresome and expensive for the payment companies to acquire merchants for offline QR code payments.
They have to deploy thousands of people on the street to paste unique QR code for each merchant or convince them to place their QR code stand on the counter.
It does not end with the acquisition. They have to reacquire them because their QR code gets frequently replaced by some other payment company’s QR code.
Scan any QR code in PayTM App
Sales agents of the payment companies use every available tactic to make sure that it is their QR code that stays on the top.
One such tactic is telling that they have acquired the other company!
Can you imagine that some of these agents are even incentivized to pull off stickers of the competition?!
With everyone targeting the same merchants, it’s like a streetfight out there.
So much so that BharatPe has 2,000 people deployed on streets and has been targeting all of Paytm’s merchant base.
The Real Deal
Transaction data history to provide loans and earn interest is the dream of all fintech company out there.
In fact, BharatPe had the target loan book of Rs.100 crore for the last financial year.
But payment companies need a certain density of data and consistency to be able to lend these merchants. Which is possible only if the merchants accept payments through their QR code.
These payment companies had found a hack to scale consumer side through cashbacks. But acquiring merchants is not the same.
The only hacks for most of them has been going door to door and convincing merchants to use their platform.
But wait, that’s not totally right.
Becoming the market leader
PhonePe has recently launched the “Khata” feature in their merchant app.
Khata feature in PhonePe Merchant App
A lot of shopkeepers maintain their credit and sales records in rough notebooks and this feature is to make their life easier by getting them to maintain a digital ledger book.
They can make credit or debit entries, send payment reminders to customer’s PhonePe App, settle dues using the “Khata” feature in the PhonePe merchant app.
Bookkeeping is a real problem for merchants.
“Khata” feature certainly looks like a clever growth hack by PhonePe to retain their merchants.
Similarly, Paytm has a business app that allows merchants to go beyond just accepting payments. Merchant partners can borrow from the app, order goods online and more.
These payment companies know that they have to own the merchant to become the market leader.
Cashbacks are not going to help them in acquiring or retaining the merchant.
They have to innovate. They have to experiment.
And whoever finds the best growth hack to this merchants acquisition and retention problem and scales it to millions of merchants across India, is going to become the market leader!
Thank you so much for reading the article.