Small cities to drive big growth for Paytm’s QR code payments, commits $35 million

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Updated: June 12, 2019 4:53:57 PM

Paytm's increased exposure towards small cities and towns gains significance as "digital PoS (QR code) is also expected to increase substantially," RBI had said its Payment and Settlement Systems in India: Vision -- 2019-21 document in May this year.

Paytm QR code accepts payment from all online instruments including UPI, wallets, credit and debit cards, net banking, (Image: Bloomberg)

Paytm today said that it will invest Rs 250 crores (around $35 million) for the expansion of its QR code-based payments in tier IV and tier V cities and towns in 2019 and is looking to tap over 20 million merchants across the country by the end of the current financial year. The company had launched the service in October 2015.

The investment would help Paytm target merchants “in smallest of towns across India such as Ajmer, Bekgaon, Kurnool, Rohtak, and Latur,” Paytm senior VP Deepak Abbot said in a statement as a majority of its over 1.2 crore merchants are based in large cities using the QR code for payment acceptance.

“QR code is efficient in terms of its low cost of set-up as you simply need to generate a code and print it on a paper versus buying a device to acquire card payments to acquire customers and expanding their network,” Pavel Naiya, Senior Analyst at CounterpointResearch told Financial Express Online.

From the perspective of cost for acquiring these merchants, it at least 3-4 times more vis-a-vis those based in major cities even as Paytm is looking to have over 60 per cent of merchants from such tier IV and tier V towns.

“There is a lack of awareness about QR code-based payments, lower customer conversion rate, high cash transactions, and hence the overall cost of acquiring merchants in small cities is high,” added.

The QR code, which accepts all online instruments including UPI, wallets, credit and debit cards, net banking, will enable Paytm with “financial inclusion in the remotest part of our country,” said Abbot.

Paytm’s increased exposure towards small cities and towns gains significance as “digital PoS (QR code) is also expected to increase substantially,” RBI had said its Payment and Settlement Systems in India: Vision — 2019-21 document in May this year, “given the current growth trend it is expected to have 5 mn active PoS by end 2021.”

Paytm had already posted a strong performance in terms of its overall transactions standing at 5.5 billion with a gross transaction value of over $50 billion in FY19 driven by improved online and offline adoption of its services across “retail payments, fees, utility payments, travel booking, entertainment, games etc,” the company said.

Among its latest offerings, the company had launched a credit card called Paytm First in partnership with Citi Bank that would help Paytm “spur large-ticket cashless payments,” Paytm chairman and CEO Vijay Shekhar Sharma had said earlier.

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