Electronic payment enabler companies like Oxigen, Obopay, Atom, Indipay, Easy Bill and Suvidha have introduced novel concepts to enable kirana stores transform into e-retailers.
They have tied up with these mom-and-pop stores to facilitate cashless payments (electronic wallet) for a host of services. The electronic wallet allows transactions for recharging of prepaid mobiles, telephone bills, electricity and water bills, DTH recharges, travel services and other utility/insurance bill payments through mobile phones.
The concept saves consumers the trouble of rushing around to make payments. Pinakiranjan Mishra, partner and leader, retail and consumer products practice, Ernst & Young, points out that kirana stores provide convenient and personalised service that organised retail cannot match.
People are more likely to make frequent purchases rather than weekly/monthly purchases. Kirana stores will provide this market to consumers, he notes.
Pramod Saxena, Chairman and MD, Oxigen Services India – which currently has 50,000 touch points through kiranas across the country — is planning to expand its retail network to 250,000 stores by 2010. It is adding 1,500-2,000 touch points every month.
The bulk of the kirana usage comes from the consumers with saving accounts, but no credit cards. The wallet allows them to do cashless shopping and make payments at a lower charge (Banks charge 2.25 per cent of transaction value, while these payment enablers charge only Rs 2-3 per payment and on some verticals a maximum of Rs 8-10).
The kiranas are able to aggregate and lower inventory. Shop owners don’t have to gather cash every day and rush to the bank and able to save on demand draft and are able to save on cheque and demand draft payments.
They will also get instant cash and won’t have to give things on credit. Shop owners also earn a commission of up to 3 per cent.
The potential of the service is high, if delivered effectively. Dewang Neralla, director, Atom Technologies, says: “We plan to bring 8,000-10,000 touch points in rural areas by next year.”
Vijay Balakrishnan, Chief marketing officer, Obopay, says: “Once the RBI guidelines are out, we will start these services from Mumbai or Chennai initially and then spread to Tier-II cities. The ubiquity of mobile phones makes the idea viable.”
