The popular digital payments app PhonePe has recently been reported to launch a feature which is bound to solve their user’s cash crunch issues. The top executives at Walmart are betting big on PhonPe to climb to the top of the digital ATM business in India with this new feature of theirs. Right now the digital payments market in India is being considered immensely competitive wherein the global retailers face stiff competition from peers such as Google, Amazon, Facebook and Alipay-backed Paytm.
Phonepe is all set to enable nearly 1 million merchants on their network to offer cash withdrawal facilities to customers who are nearby at a fee fixed by them with their newly launched ATM feature.
In conversation with sources who are familiar with PhonPe’s newly launched feature, Dazeinfo found out that 50,000 merchants have already been onboarded as part of the pilot launch. Over 5,00,000 more merchants have been geo-tagged and approved by PhonePe who can enable the offering of this new service of theirs with excess cash to help customers convert their digital money tat the touch of a button on the app. They will soon start promoting this new offering of theirs as the marketing plans have been set in motion as of today.
This feature of PhonePe rivals that of Paytm’s Payments Bank which comes with a physical ATM card to facilitate cash withdrawal. Paytm’s Payments Bank feature enables their users to hold a virtual bank account with Paytm which operates like any other bank. A Rupay ATM card for the same gets issued which helps users withdraw cash or make POS transactions.
PhonePe’s feature, however, aims to simplify the process by eliminating the requirement of holding a virtual bank account and having a physical debit card to withdraw cash. Instead, their users can simply use the app itself to make a transaction to a merchant and get their cash for a fixed fee. One could draw some similarities of PhonePe’s new feature with that of the Airtel Payments Bank or Vodaphone M-Pesa (which shut down as of October 2019) as they have some similar functionalities.
“It’s a revolutionary solution with the potential to transform cash in India,” said Judith Mckenna, CEO Walmart International, at the retailer’s post-earnings presentation to analysts in New York on Tuesday. “If you think about it, there are only two lakh ATMs in India and this service will increase the capability to access cash by nearly five times soon.”
Vivek Lohcheb, head of Offline Business Development at PhonePe mentioned that the idea behind this feature is to increase merchant engagement on the platform by creating a new value service for both local shop owners and consumers.
PhonePe Aiming Big In 2020
In the possible absence of Merchant Discount Rates (MDR) on all Debit/Credit card transactions, Phonepe believes that the introduction of such value-added services to existing business channels will likely be the key to future growth in the highly competitive market with the likes of other major players such as Paytm, Google, and now Whatsapp, facing off to dominate merchant and customer engagement modes. Walmart’s ambition is to position PhonePe as “India’s largest transactional platform anchored in payments” according to its CEO Mckenna.
At the New York conference, according to the data shared by Mckenna, PhonePe’s annual payments value stood at $180 billion with nearly 20 million daily users on the platform. In India, together with Paytm and Google Pay, PhonPe covers over 90 per cent of UPI-based transactions.
PhonePe also has plans to grow aggressively to 150 million new users this year in India. According to them, they have crossed 5 billion transactions whilst growing 5 times in a year in 2019.
PhonePe’s immediate rival, the Gurgaon-based Paytm from One97 Communications is also doing everything they can to up their game. Paytm recently came out with an All-In-One Pos for their merchants which will provide hassle-free transactions along with a new feature which will enable their users to pay their subscription-based bills.