PhonePe’s offline merchant base crosses 5-million mark

By: |
Mumbai | Published: June 21, 2019 1:33:52 AM

PhonePe’s offline merchant base has crossed the 5-million mark, the company said on Thursday, while announcing a cashback of up to Rs 1,000 for consumers when they pay using the fintech player’s QR code at an offline store.

The company had started the year 2019 with 1 million merchants.

PhonePe’s offline merchant base has crossed the 5-million mark, the company said on Thursday, while announcing a cashback of up to Rs 1,000 for consumers when they pay using the fintech player’s QR code at an offline store.

“PhonePe is also providing daily incentives to merchants, in line with the auspicious daily ritual of ‘Bohni’, on the first transaction of the day done through the PhonePe QR code. Every retailer can earn a total amount of Rs 1,400 every month,” the company said in a statement.

The announcement came on a day PhonePe’s rival Paytm said it is shifting incentives from the person-to-person (P2P) channel to the person-to-merchant (P2M) channel, especially kirana stores. The Alibaba-backed firm is targeting over 20 million retail kirana stores to enable them to accept all digital payment modes, including Unified Payments Interface (UPI), wallet and cards.

A little late to enter the offline market, PhonePe has been focusing on expanding its offline vendor base in recent months in order to bump up merchant usage volumes. The company had started the year 2019 with 1 million merchants.

Hemant Gala, head – bank relations, PhonePe, recently told FE that it is going to use the QR-based mode to acquire offline customer rather than the older calculator-like point of sale (POS) machine as QRs are more convenient for merchants to use. “The incidence of merchants falling off is also now not as high as before because the number of customers we have is quite high, about 50-60 million. That is boosting transactions on the merchant side. Also, using a QR ensures that the merchants do not require to be trained in using them,” Gala said.

In September 2018, Paytm had said that of its 9-million-strong merchant base, over 5 million offline merchants were accepting UPI payments. “This large-scale acceptance at merchant offline stores is now contributing over 40% of all UPI-based transactions on our platform,” the payment firm had said in its blog. Kiran Vasireddy, chief operating officer, Paytm, had told FE that the firm would continue to invest in growing its merchant network. “Till the time we get 15-20 million merchants on our platform, we’ll continue to invest in expanding this network,” he had said.

In February 2018, Google Pay had announced that it would be working with State Bank of India (SBI), the country’s largest bank, to gain a foothold among small offline merchants. At that time, Google Pay had 5.25 lakh merchants on board, most of whom were small kirana stores and medium-sized businesses. Ever since, there have been no fresh updates from the company on the number of merchants acquired.

Till late 2017, the acquisition of small merchants for UPI payments was less remunerative for banks and payment providers than card-based payments. In December that year, the Reserve Bank of India (RBI) mandated a drop in merchant discount rate (MDR), or the fee paid by merchants to banks, for merchants with a turnover of up to Rs 20 lakh. For QR-based transactions, the MDR was set at 0.3-0.8%, lower than 0.4-0.9% for other transactions. This is understood to have incentivised the acquisition of small merchants for UPI.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.