Flipkart-owned PhonePe also said that during Akshaya Tritiya, total digital gold transactions on the platform increased by 125% as compared to last year, and average ticket size of purchases were also up by 165%
Digital payments firms have been pushing their digital gold offerings, to boost transactions on their platform, capitalising on the inability of consumers to buy physical gold during the lockdown.
On the occasion of Akshaya Tritiya, on Sunday, Noida-based Paytm said that it sold a little over 37 Kgs of digital gold on its platform. While Bengaluru-based PhonePe claimed to have sold over 100 Kgs of Gold digitally, this year, as a run up to the festivities.
Flipkart-owned PhonePe also said that during Akshaya Tritiya, total digital gold transactions on the platform increased by 125% as compared to last year, and average ticket size of purchases were also up by 165%.
Even Chinese electronics player Xiaomi, last week, joined the ‘gold rush’ before the festivities, and said that it is introducing digital gold on its payments platform, MiPay. Other players which currently are offering digital gold as an offering include - Google Pay, MobiKwik and Axis Bank-owned Freecharge.
Both Freecharge and Xiaomi didn’t share the numbers at the time of publication.
“Amidst the lockdown and record gold prices this Akshaya Tritya, we sold over 37 kgs of Paytm Gold. Smaller cities contributed to 60% of all orders and we are thankful to the buyers for their trust on Paytm Gold," said a Paytm Gold spokesperson.
While Paytm claims that a majority of this demand is from Tier 2 geographies and beyond, PhonePe also reported a similar trend with customers in Tier 2 and 3 geographies opting for the digital gold offering.
“Customers from Jharkhand bought the most amount of gold by weight and the highest number of customers and transactions originated from West Bengal. Some of the Tier 3 cities that contributed maximum transactions included Tirupati, Bhilai, Hanamkonda, Bankura and Muzaffarpur among others," said a PhonePe spokesperson.
Paytm and PhonePe had both launched digital gold offerings on its platform in 2017, while Gurugram-based MobiKwik launched the offering in 2018, and Google Pay finally allowed users to invest in digital gold in April 2019.
“The digital gold industry has seen growth this year. We estimate that March 2020 volumes are 2x of Feb 2020 volumes. On Akshaya Tritiya, we estimate that the digital gold industry sold about 250 kgs in 2020 compared with 80-100 kgs in 2019, so definitely the lockdown and increasing Gold prices have helped increase sales," said Gaurav Mathur, Managing Director, SafeGold.com, a digital platform which allows users to buy, sell and receive vaulted gold.
However, it is interesting that the online trend of investing in gold digitally, does not match with the physical gold buying behaviour. This is because digital payment firms and consumers market it as an investment option.
“Traditional gold buyers tend to stop buying when prices rise, on digital platforms we see the opposite behaviour - people buy less when prices fall and more when prices rise," said Mathur.
“Investing in Gold continues to be a safe investment bet, since other investment returns aren’t showing much growth. It becomes a great option for individuals who are looking at alternative investments to diversify their portfolio. However, there can be pre-conceived notions amongst users on not having the physical custody of this Gold, which may create some amount of mistrust," adds Ankur Bisen, senior vice president, retail and consumer, Technopak, a management consulting firm.
Owing to the challenge around trust, Technopak believes that a lot of people continue to not invest in this digital investment option by payment players.
“To really boost adoption, it can’t be just payment platforms who are offering this option, there needs to be jewellery manufacturers, NBFCs and multiple other sectors who should create and push products around this offering, to reach a larger audience," Bisen said.
Even SafeGold said that consumer education is needed since the vast majority of consumers still are learning about digital gold.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!