Covid-19 opens new doors for fintechs as users shun cash deals for digital

Companies report spike in transaction via android apps as merchants opt for contactless payment systems

D K Pandey, a senior manager at beauty and wellness parlour VLCC in New Delhi has been learning a technology he has never used in his 20 years of experience at the company — contact payments. 
 

“Over 20 per cent of the transactions done during the lockdown were through the android app. It does not require a laptop or any other machine,” says Pandey.
 

Another retail associate, Hitesh has learnt a new way to intimate customers about payments. This is especially for home deliveries from the supermarket he works in as store supervisor. It happens either through SMS or WhatsApp. 
 

“Now, many customers only want to make digital payments and not cash to be on the safer side,” says the 33-year-old Hitesh.

Krishna Supermarket in Delhi-NCR region has implemented the e-point of sales (PoS) feature since April, and it now accounts for nearly 30 per cent of the transactions it sees. 

Around 50,000 merchants like Krishna Supermarket have started tapping Pine Labs’ Andriod app for contactless payments and are using it as a viable alternative to their PoS swiping machine.
 

For more than 80 per cent of merchant businesses in the country that are not digitised, lockdown has provided a positive stimulus to them to consider adoption of digital payments at the point of sale. 
 

“With internet becoming affordable and majority of the Indian smartphone market captured by the Android operating system, the launch of our ePOS by Pine Labs app was strategic and intended to reach out to the merchants in need. 
 

The application comes with no hardware requirements and provides easy reconciliation and settlement to merchants,” says Kush Mehra, chief business officer at Pine Labs.

The coronavirus (Covid-19) pandemic has changed how businesses look at payments. Earlier, fintech companies said when they were talking to merchants, they were not interested in digitisation. “But now, a lot of them are reaching out to us to figure out contactless payments. The convergence from offline to online will go through an omni-channel experience. Things are really positive for the long term,” says Mohit Gopal, senior vice-president and head of strategy, PayU India. The fintech firm’s omni-channel team is getting 10-15 times the leads compared to pre-Covid times, including those from grocery stores, schools and traditional companies.
 

When the lockdown began, things were not so bright for the fintech space. The sector saw a downfall in business by up to 30 per cent as non-essential ecommerce, travel and hospitality shut down. According to NPCI, total UPI transactions in the country stood at 990 million in April, against 1.25 billion in March, almost a 21 per cent month-on-month decline. And this was the second consecutive month when UPI payments in the country took a dip.
 

The sector got into an overdrive to respond to the situation, which has led to the birth of several new business models in the fintech space.

Bengaluru-based payments platform Instamojo has launched its flagship Sachet Loans on WhatsApp, post lockdown. These are small loans of up to Rs 20,000. The company has disbursed up to 300 such loans post lockdown with average ticket size of Rs 6,355. However, from a lending perspective, while digital lenders are striving for more liquidity, the lending industry may take some more time to revive. Last week, fintech digital lender Lendingkart had laid off 30 per cent of its workforce, as business continues to be hurt.

Instamojo has also rolled out Priority KYC last month which allows merchants to go online with their products in just 5 minutes. These initiatives and the slow reopening of businesses have allowed the company to acquire 1,500 merchants daily in April.

With e-commerce deliveries and the aviation sector having resumed, another Bengaluru-based start-up Razorpay is seeing a recovery for online payments. 

“On our platform, we saw that the transactions in e-commerce (including transactions for non-essentials) increased by 25 per cent in a week’s time (between May 11 and May 18, as compared to May 3-10). Also, the usually hailing payment methods like UPI and Cards grew about 30 per cent and 18 per cent, respectively,” says Harshil Mathur, chief executive officer (CEO) & Co-founder, Razorpay.
 

Pine Labs, which became the country’s first unicorn in 2020, has partnered Qwikcilver to launch e-gift cards to help businesses tap their loyal customer base to increase revenues. 
 

Walmart-owned payments platform PhonePe introduced a Pay Now feature, which enables customers to make payments remotely from within the PhonePe app without the need for scanning any QR. Since the launch of these features, the company has seen a three-fold increase in activity and a 50 per cent rise in daily traffic on the ‘Stores’ page.