PoS glitches put offline expansion plan in limbo

By: | Updated: September 14, 2018 5:28 PM

Flipkart-owned online payments app PhonePe’s POS devices are suffering from manufacturing glitches thus affecting its expansion into offline unorganised retail merchants.

PoS, Flipkart, PhonePe, POS devices,  unified payments interface, Flipkart, PhonePe, Metro Cash & CarryThe device is designed like an electronic calculator. In order to make a payment, customers need to bring their smartphones close to the device and the bill amount will display on the PhonePe app.(Reuters)

Flipkart-owned online payments app PhonePe’s POS devices are suffering from manufacturing glitches thus affecting its expansion into offline unorganised retail merchants. PhonePe had introduced the Bluetooth-enabled point of sale (PoS) device in November last year and had said that it aims to sell around 1 million units in top 20 cities including Mumbai, Delhi, Kolkata, Hyderabad, Chennai and Pune by July. The plan was started as a pilot programme in Bengaluru.

However, the production of the POS devices, which PhonePe has outsourced to third parties, has run into manufacturing problems that have halted the pilot programme, the company said. “We had to reorient our strategy in terms of the manufacturing plans, but currently, we are not close to the numbers we had anticipated,” said Yuvraj Singh Shekhawat, head-offline organized business at PhonePe. “From the perspective of extending the pilot to multiple other cities and use cases, we are not equipped,” he added.

He said the problems were related to the vendors facing problems to manufacture the devices based on the form factor and design specifics, based on which the company had developed the device. Currently, the company has deployed 10,000 POS devices. PhonePe said there was also no definitive delivery timelines provided by the vendors, which added to the problem. “We didn’t want to make any promises to the merchants and not deliver to them,” said Karthik Raghupathy, head, Strategy & Planning at PhonePe.

The device is designed like an electronic calculator. In order to make a payment, customers need to bring their smartphones close to the device and the bill amount will display on the PhonePe app. The merchant needs to calculate the amount and press the ‘pay’ button. Customers can choose from debit cards, credit cards, unified payments interface (UPI) or wallets and make the payment using
the app.

PhonePe is also leveraging the strong offline presence of companies like McDonald’s, Metro Cash & Carry, KFC and others through partnerships to expand into the offline payments space. The company said that besides grocery and kirana stores, the POS device has also been deployed at fuel outlets like Indian Oil stations.

Raghupathy added that after Walmart’s 77% acquisition of Flipkart, PhonePe will be able to leverage the business network Walmart has in India with kirana stores and other merchants. Walmart operates 21 B2B cash & carry stores in a wholesale format called Best Price Modern Wholesale. PhonePe claimed that it is currently present in over three lakh small outlets including the national chains.

By Aniruddha Ghosh

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