E-payments jump in small towns, cities

Digital payments are moving beyond the metros, and electronic payment firms are positioning themselves for the change. With the pandemic prompting more people to try out contactless transactions, firms are rolling out products and features to tap the new frontiers.

While BharatPe said transaction values have risen 30-35% in tier-II geographies and beyond, Paytm Payments Bank (PPB) said its share of transactions from tier-II, -III and -IV locations,which was around 50% in 2018, has increased from 60% to 67% in the past six months. PhonePe said 70% of its transactions now comes from tier-II, III cities and beyond, while Freecharge said its share of transactions from smaller towns are up from 3% pre-covid to 5% now.

“In the past five months, with people staying indoors, the demand for online payments grew by 40% in tier-II and -III cities. Earlier, consumers from a lot of these tier-II and -III cities would only order essentials online, but are now demonstrating high adoption for non-essential purchases like bill payments, video streaming subscriptions and even dating and matrimony services,” said Harshil Mathur, CEO and co-founder, Razorpay, an online payment gateway provider to businesses.

Paytm Payments Bank has earmarked ₹100 crore to promote its point-of-sale device, Paytm Soundbox, in tier-II and -III regions, apart from introducing digital ledgers for merchant partners and a product to help small enterprises make bulk payments. In tier-II regions, users can choose to receive direct benefit transfers on Paytm Payments Bank. It has also started focusing on the Aadhaar-enabled payment system.

Paytm Payments Bank said it has signed up over 3.6 million merchants in rural areas. “Effectively, two out of every three transactions on Paytm are done in a non-metro city. We have also doubled the number of our business correspondents in smaller towns and cities,” a spokesperson said.

This week, PhonePe said it will increase its acceptance to 25 million small merchants this year, including kirana store owners across 5,500 talukas in tier-III and -IV regions. “Rural geographies are crucial to PhonePe. If we look at a tier-wise break-up of transactions, over 70% of PhonePe transactions come from tier-II and -III. In July 2020, we touched record monthly transactions of 620 million. Payments normalized back to pre-lockdown volumes in June, but for July we have seen a record spike,” a spokesperson said.

BharatPe has been expanding its QR-based payments service in smaller towns, and offering credit to merchants in partnership with non-banking financial companies (NBFCs).

“We’ve seen much higher propensity to use digital payment methods in tier-II cities and beyond. BharatPe has seen a 30-35% jump in transaction value on the platform in these areas post lockdown,” said Suhail Sameer, group president, BharatPe.