Why GPay and PhonePe have a tough fight against Bank Contactless cards
Plastic vs App. The Battle Royale of Indian Transactions Market Ft. Big Banks and Big Tech
TLDR
Clear advantages of Contactless cards over digital/phone payment apps:
- No need for internet access. Or to open an app. Or to go through passwords.
- Easier. Quicker. Seemingly simpler utility in supermarkets, restaurants, hotels, and self-checkout counters
- Less overhead costs. Since most payment outlets are upgrading their point of sale (Case in point: Decathlon Athleisure stores, post covid)
- Familiarity + Tap-to-pay convenience. Tap and go. That’s their pitch!
- Savvier. Cards are physical, offer a sexier mode to pay, are not bourgeois. Instant appeal to aspiration.
Shortcomings:
- Atypical advertising
- Entrenched marketing. GPay connects with the market through clever targeting and ads.
- Lack of connection. New technology for the masses. No desi appeal. UPI is simpler and PayTM and sketched inroads already.
- Uphill battle. The current point-of-sale paradigm is well understood by shopkeepers and buyers. Banks can get a headstart only in established locales and stores.
Visa, in its bid to carve itself a slice of the Digital/Non-cash payment market, has introduced its contactless cards to the Indian market.
It’s a seemingly simple play. Get people to use contactless cards — bring about ease of utility as a push for adoption (ref: ad below)
“The current 160 million unique mobile payment users will multiply by 5 times to reach nearly 800 million by 2025 — likely to grow 3-folds to Rs 7,092 trillion. This growth will be driven by a number of demand and supply-side drivers” — Redseer Consulting
As of now, exactly 72% of mobile payment users have used a contactless card to make a payment, compared to just 42% of non-users. That amounts to over 252 Million of Paytm’s 350M userbase.
A slight dent in transaction volume to say the least.
So where’s the pivot point? UPI already has made inroads. Every galli nukad dukaan waala (corner shopkeeper) is familiar with PayTM and its quirky little jingle.
What could Visa and other Bank Cards do better in order to make an impression on the masses — impact their transaction habits? Find a small slot in their wallets and purses?
- Certainly, kick poor ads to the curb? Introduce better Ads. Seriously, the current narrative of carrying a baby in one arm and paying with the card offers no connection or logic.
- I mean, really, the ad conveys cringe in multiple dialects.
Watch the ad if you think I am kidding. Ad execs presenting cringe-core as a means to attract customers.
Here’s a kicker for starters:
~ Ruko Bhaiya, Cash laati hu. ~ Ruk yaar, Internet nahi chal raha. Cash lana padega
> Setup based in a supermarket. In a restaurant. At a shop or kiosk. At a metro ticket counter. This presentation might even help banks market against UPI/Mobile Wallet’s inadequacies and troubles in real-time transactions.
Moreover, it could kickstart a PoS deployment in at least high-end restaurants and department stores in urban locations. Bring about a more efficient and suave means of payment.
Beat the dependence on the Internet. Address the snarls in digital transactions. Present and orient the user in terms of usability. Suggest alternative, smart payment.
- Offer ease of use examples (much like Amazon’s :buy and go:):
Contactless card offer a seemingly innate advantage over internet and wallet dependent payment apps that are available online.
The Digital Payments market in India is big. And while Paypal ran with its tail tucked in, larger banks would have a larger appetite for risk, access to Indian talent, and the pedigree that is associated with trust in payments.
+cards offer swag that attracts the aspirational GenZ would prefer. Cooler to use a card than to fidget around with your phone on a business meeting or a date, eh?
Or perhaps they’ll stick to what they are used to. Who can tell?
Anyway, giving contactless cards a momentary edge is a gamble that Indian payment players would not want to take.
