 "Growing share of wallet")
With the number of smartphone users increasing by leaps and bounds and the growing popularity of e-commerce, the digital payments industry in India was bound to take off. M-wallets (mobile-based cardless mode of payment) have emerged as one of the biggest beneficiaries of a fast maturing digital payment industry in the country. According to research firm RNCOS, the m-wallet market will grow four times in as many years. It stands at Rs 350 crore currently and by 2019, it is expected to grow to Rs 1,210 crore. These numbers clearly indicate that m-wallets are giving other modes of payment--including credit card, direct debit and bank transfers - a run for their money.
Little wonder m-wallet players such as Paytm, Citrus Pay, MobiKwik, Oxigen, Airtel Money, M-Pesa and m-Rupee among others are moving aggressively to scale up. For a majority of these players, the key to scaling up lies in creating more use cases for m-wallet services and cultivating a highly engaged digital customer base. In this Paytm, which had a head start over most others - appears to have cornered a huge share of the wallet market. Nitin Misra, vice-president, - products, Paytm, says, "We have managed to attract most of the high intensity traffic use cases including recharges and utility payments. For us the first step was to earn the consumers' trust. Once consumers began trusting us with their payments the next logical step for us was to launch our own marketplace. And with the company receiving the payments bank licence we are asking our consumers to park their savings with us simply because they trust us."
Having started out with a strong transaction model, Misra, points out that Paytm has succeeded in changing consumer habit in favour of making digital payments through m-wallets. This will facilitate the growth of its marketplace as well as the payments bank business. Paytm has a subscriber base of about 100 million. Compare this with Citrus Pay, which has a considerably smaller subscriber base of 17.5 million. It is looking at the issue of scaling up its business and commanding customer loyalty through a different prism altogether.
For Jitendra Gupta, managing director, Citrus Pay, there are two ways of commanding customer loyalty. The first is through driving adoption by educating users about the benefits of an m-wallet service - particularly the ease of use and security that it offers through cashless transaction. The second part relates to product experience. To illustrate his point, Gupta puts forward the example of two mobile phone brands, Apple and Nokia. He says these two players started off by offering products at similar price points. But over a period of time, Apple zoomed past Nokia in commanding a higher price based on its premium imagery. Thus, loyalty is also about price versus product experience. "Our objective is to have 30 to 40 million users who are highly engaged with the digital platform. We want to become a premium brand in the m-wallet space," says Gupta.
Most m-wallet players are using incentives such as cash-backs and coupons to encourage consumers to come back for a repeat transaction on their platforms. With a huge amount of consumer data at their disposal, m-wallet service providers are using analytics to firm up their business strategy and to reach out to consumers with customised offers and incentives. At Citrus Pay, for instance, data analysis has helped the company identify hyper local grocery and food delivery as the two leading repeat categories for consumer purchases. The ticket value of these purchases is in the range of Rs 300 to Rs 400. Based on these insights, the wallet service provider is focusing on providing incentives to buyers in these two categories to increase stickiness. Citrus Pay's Gupta believes that analytics will become more important for the m-wallet industry as it helps slice and dice consumer data and then turn that data into actionable insights for merchants. "While talking about promoting loyalty, it is equally important to ensure that one brings more traffic to merchants. The real question, as a payment platform, is how can you help merchants drive more conversions."
Meanwhile, Paytm's Misra points out that to maximise the impact of cash-back offers Paytm invests significant time in bucketing its consumers. For instance, using available data, Paytm can figure out whether a consumer who is availing of the mobile recharge facility using its m-wallet product is also going in for a DTH recharge or not. If not, there would be targeted offers and discounts for that consumer so that she uses the same facility for other recharges also--basically increasing the usage occasions and opportunities.
Over a period of time, Paytm plans to take the consumer data bucketing process a step forward by coming up with a framework to help provide concrete incentives. Misra emphasises that loyalty is not just about rewards. "It's also about customer segmentation," he says. "We are going to use data captured to eventually build a loyalty programme. Using data inputs such as the amount of time a consumer spends on our platform and her buying preferences, we are going to build consumer profiles. Going forward, on the basis of such profiles we will look at waiving off a few additional checks and balances for select consumers, thereby making their product experience hassle-free and more rewarding," says Misra.
With every player in the space wooing consumers with huge cash-backs and discounts, the moot question is, how long can players sustain such offers and how effective are these in promoting product stickiness and customer loyalty. "Simple cash backs and discounts alone do not contribute to customer stickiness. Customer loyalty can only be guaranteed when they have a positive experience with your brand and service," says Sunil Kulkarni, deputy managing director, Oxigen Services (India), which owns m-wallet product, Oxigen. He adds, "The way out is to get customers to experience your service; therefore customer engagement is what we are looking at. Customer engagement is the crux of all our efforts, be it service delivery or information dissemination. Over the past six months we have moved aggressively on this front and have launched various campaigns like the 'Give Selfishly' campaign and the ongoing 'Playthehost' campaign. We also have cricketing legend Sachin Tendulkar on board as our brand ambassador and are hoping to make the right impact.''
Kulkarni says that in the final analysis, what will be make or break for m-wallet players would be their ability to bridge the gap between online and offline channels of commerce.
Create more use cases for m-wallets: Shashwat Sharma
Further, m-wallet players will have to create an ecosystem around these new categories because it is going to be very difficult for the players to sustain long-term advantage in existing crowded categories including e-commerce, cab service, online recharge, bus ticket bookings and online food payments etc. Therefore, in order to make an impact in a highly competitive market, m-wallet players will have to create brand connect and discover more use cases for their product.
As regards consumer loyalty, players will have to identify well-defined spend categories for different users (including urban and rural). For creating product stickiness, players will have to take into account different needs of consumers. Since every consumer will have different requirements, m-wallet players have to ensure that their loyalty programme provide consumers ease of earning as well as redeeming these earned points. Players will have to think in terms of long-term incentives to encourage consumers to spend more time on their platform.
Going forward, while partnering with various merchants players need to bring in some element of inter-operability to encourage greater product usage.
Shashwat Sharma
Partner, Management Consulting, KPMG India
Little wonder m-wallet players such as Paytm, Citrus Pay, MobiKwik, Oxigen, Airtel Money, M-Pesa and m-Rupee among others are moving aggressively to scale up. For a majority of these players, the key to scaling up lies in creating more use cases for m-wallet services and cultivating a highly engaged digital customer base. In this Paytm, which had a head start over most others - appears to have cornered a huge share of the wallet market. Nitin Misra, vice-president, - products, Paytm, says, "We have managed to attract most of the high intensity traffic use cases including recharges and utility payments. For us the first step was to earn the consumers' trust. Once consumers began trusting us with their payments the next logical step for us was to launch our own marketplace. And with the company receiving the payments bank licence we are asking our consumers to park their savings with us simply because they trust us."
Having started out with a strong transaction model, Misra, points out that Paytm has succeeded in changing consumer habit in favour of making digital payments through m-wallets. This will facilitate the growth of its marketplace as well as the payments bank business. Paytm has a subscriber base of about 100 million. Compare this with Citrus Pay, which has a considerably smaller subscriber base of 17.5 million. It is looking at the issue of scaling up its business and commanding customer loyalty through a different prism altogether.
For Jitendra Gupta, managing director, Citrus Pay, there are two ways of commanding customer loyalty. The first is through driving adoption by educating users about the benefits of an m-wallet service - particularly the ease of use and security that it offers through cashless transaction. The second part relates to product experience. To illustrate his point, Gupta puts forward the example of two mobile phone brands, Apple and Nokia. He says these two players started off by offering products at similar price points. But over a period of time, Apple zoomed past Nokia in commanding a higher price based on its premium imagery. Thus, loyalty is also about price versus product experience. "Our objective is to have 30 to 40 million users who are highly engaged with the digital platform. We want to become a premium brand in the m-wallet space," says Gupta.
Most m-wallet players are using incentives such as cash-backs and coupons to encourage consumers to come back for a repeat transaction on their platforms. With a huge amount of consumer data at their disposal, m-wallet service providers are using analytics to firm up their business strategy and to reach out to consumers with customised offers and incentives. At Citrus Pay, for instance, data analysis has helped the company identify hyper local grocery and food delivery as the two leading repeat categories for consumer purchases. The ticket value of these purchases is in the range of Rs 300 to Rs 400. Based on these insights, the wallet service provider is focusing on providing incentives to buyers in these two categories to increase stickiness. Citrus Pay's Gupta believes that analytics will become more important for the m-wallet industry as it helps slice and dice consumer data and then turn that data into actionable insights for merchants. "While talking about promoting loyalty, it is equally important to ensure that one brings more traffic to merchants. The real question, as a payment platform, is how can you help merchants drive more conversions."
Meanwhile, Paytm's Misra points out that to maximise the impact of cash-back offers Paytm invests significant time in bucketing its consumers. For instance, using available data, Paytm can figure out whether a consumer who is availing of the mobile recharge facility using its m-wallet product is also going in for a DTH recharge or not. If not, there would be targeted offers and discounts for that consumer so that she uses the same facility for other recharges also--basically increasing the usage occasions and opportunities.
Over a period of time, Paytm plans to take the consumer data bucketing process a step forward by coming up with a framework to help provide concrete incentives. Misra emphasises that loyalty is not just about rewards. "It's also about customer segmentation," he says. "We are going to use data captured to eventually build a loyalty programme. Using data inputs such as the amount of time a consumer spends on our platform and her buying preferences, we are going to build consumer profiles. Going forward, on the basis of such profiles we will look at waiving off a few additional checks and balances for select consumers, thereby making their product experience hassle-free and more rewarding," says Misra.
With every player in the space wooing consumers with huge cash-backs and discounts, the moot question is, how long can players sustain such offers and how effective are these in promoting product stickiness and customer loyalty. "Simple cash backs and discounts alone do not contribute to customer stickiness. Customer loyalty can only be guaranteed when they have a positive experience with your brand and service," says Sunil Kulkarni, deputy managing director, Oxigen Services (India), which owns m-wallet product, Oxigen. He adds, "The way out is to get customers to experience your service; therefore customer engagement is what we are looking at. Customer engagement is the crux of all our efforts, be it service delivery or information dissemination. Over the past six months we have moved aggressively on this front and have launched various campaigns like the 'Give Selfishly' campaign and the ongoing 'Playthehost' campaign. We also have cricketing legend Sachin Tendulkar on board as our brand ambassador and are hoping to make the right impact.''
Kulkarni says that in the final analysis, what will be make or break for m-wallet players would be their ability to bridge the gap between online and offline channels of commerce.
Create more use cases for m-wallets: Shashwat Sharma
Further, m-wallet players will have to create an ecosystem around these new categories because it is going to be very difficult for the players to sustain long-term advantage in existing crowded categories including e-commerce, cab service, online recharge, bus ticket bookings and online food payments etc. Therefore, in order to make an impact in a highly competitive market, m-wallet players will have to create brand connect and discover more use cases for their product.
As regards consumer loyalty, players will have to identify well-defined spend categories for different users (including urban and rural). For creating product stickiness, players will have to take into account different needs of consumers. Since every consumer will have different requirements, m-wallet players have to ensure that their loyalty programme provide consumers ease of earning as well as redeeming these earned points. Players will have to think in terms of long-term incentives to encourage consumers to spend more time on their platform.
Going forward, while partnering with various merchants players need to bring in some element of inter-operability to encourage greater product usage.
Shashwat Sharma
Partner, Management Consulting, KPMG India