{"id":47,"date":"2020-01-03T12:17:14","date_gmt":"2020-01-03T12:17:14","guid":{"rendered":"https:\/\/www.zaggle.in\/blog\/2020\/01\/03\/how-technology-can-help-deliver-seamless-employee-benefits-cashless-paperless\/"},"modified":"2022-08-06T17:27:39","modified_gmt":"2022-08-06T11:57:39","slug":"how-technology-can-help-deliver-seamless-employee-benefits-cashless-paperless","status":"publish","type":"post","link":"https:\/\/www.zaggle.in\/blog\/how-technology-can-help-deliver-seamless-employee-benefits-cashless-paperless\/","title":{"rendered":"How technology can help deliver seamless Employee Benefits: Cashless & Paperless"},"content":{"rendered":"

It may seem counterintuitive, but Indian digital payments major PhonePe is chasing growth by facilitating cash withdrawals. For this, it\u2019s even hitch-hiking on offline retailers<\/a>.<\/p>\n

The Walmart-backed platform launched PhonePe ATM service on its app on Feb. 5. The feature allows users to collect physical cash\u2014up to Rs1,000 ($14) a day\u2014from a kirana<\/em> (mom-and-pop) store and transfer an equivalent amount to the merchant from their PhonePe app.<\/p>\n

Customers in 300 cities across Delhi, Mumbai, and Bengaluru can now locate nearby stores offering this facility on the PhonePe app and use the service for free. PhonePe says it aims to cover more Indian cities in the coming months.<\/p>\n

PhonePe ATM will benefit those who don\u2019t have ATMs in their vicinity or those in areas where ATMs frequently run dry of cash. \u201cPhonePe ATM service will help users withdraw money within a radius of 15-20 metres, doing away with the need to travel long distances in search of a (bank) ATM,\u201d Vivek Lohcheb, the company\u2019s head of offline business development, told Quartz.<\/p>\n

He adds that there is no irony in a digital wallet encouraging the use of cash. \u201cWe don\u2019t want to increase cash circulation in the market. The fact is, 97% of commerce already happens through cash<\/a>. So, with our new service, we only want to facilitate that requirement,\u201d said Lohcheb.<\/p>\n

The goal is to create more use-cases for existing consumers and encourage them to carry out transactions on our platform, he added.<\/p>\n

Some experts, though, doubt if the service will be useful for existing users. \u201cThe ATM idea is purely a gimmick. Most customers using digital payments apps are digitally savvy and don\u2019t have much requirement for physical cash,\u201d said Ashneer Grover, CEO and co-founder of BharatPe, a Delhi-based fintech company.<\/p>\n

More users<\/h2>\n

While kirana<\/em> store owners can benefit from higher footfalls from the service, experts say the real benefit for PhonePe lies in expanding its user base, which currently stands at 185 million.<\/p>\n

PhonePe: Key business metrics in numbers<\/h3>\n
<\/figure>\n

\u201cWhat PhonePe is doing is, it is familiarising more people with its digital payments platform\u2014albeit in the garb of cash transactions. Consumers will start using the app to withdraw cash, and with time use it directly for digital transactions,\u201d said Bala Parthasarathy, CEO and co-founder of MoneyTap, a Bengaluru-based firm offering credit.<\/p>\n

Digital transactions in India have witnessed a tenfold increase between 2013 and 2019, but remain less common than in other BRICS countries, according to a May 2019 Reserve Bank of India report<\/a> (pdf).<\/p>\n

With slow growth<\/a> in the uptake of digital transactions, digital payments platforms are left with little choice but to piggy-back on the predominant kirana<\/em> stores. \u201cKirana<\/em> stores have survived the supermarkets, big retail chains, and even e-commerce. Ironically, the bigger players including digital payment platforms and large retailers are now striving to work with the same kirana<\/em> stores that they are competing with,\u201d said Parthasarathy of MoneyTap.<\/p>\n

Challenges remain<\/h2>\n

PhonePe\u2019s inorganic growth strategy may give it access to more users, but this approach comes with pitfalls, according to experts.<\/p>\n

\u201cBy tying up with kirana stores for withdrawal of cash, PhonePe is letting consumer experience go out of hand,\u201d said Raj N Phani, founder of the Hyderabad-based fintech company, Zaggle<\/a>. \u201cThe company will no longer have the advantage of overseeing and managing end-user experience. This could hurt brand PhonePe as it could face disgruntled customers.\u201d<\/mark><\/p>\n

Scaling up the service would also pose challenges. PhonePe will have to invest heavily in educating merchants about using PhonePe ATM facility, more so in smaller cities, where digital literacy is low. \u201cThis reliance on local shop owners for facilitating cash withdrawal will put more pressure and increase PhonePe\u2019s costs for training merchants and maintaining record-keeping systems,\u201d said Parthasarathy.<\/p>\n

With the new service, PhonePe has also made itself vulnerable to fraud. There could be cases where merchants and customers carry out withdrawals and dishonestly contest transactions. There is also the possibility of frivolous cases of customers collecting money and denying doing so.<\/p>\n

Making cash available all the time at the kirana stores is also going to be a big task. For example, users not finding cash at a kirana store will end up being unhappy and waste no time in switching over to a competitor, suggested Phani.<\/mark><\/p>\n

The team at PhonePe is aware of some of these pitfalls. \u201cTo override this uncertainty and ensure a user does not return disappointed from a kirana<\/em> store, we have created a tab on our app, which merchants can toggle off to show whether they have enough cash to disburse or not,\u201d said Lohcheb.<\/p>\n

Even if PhonePe plugs all the loopholes, the company still does not have a revenue model to monetise the service. Without revealing details, Lochebe said, \u201cWe are going to launch more value-added services for our customers and merchants in the coming months. We are experimenting and evaluating multiple revenue models to see how best we can monetise our new offerings.\u201d<\/p>\n

In the absence of a revenue model, it is to be seen how PhonePe makes its bet on offline retail pay off.<\/p>\n

Source: Quartz India<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It may seem counterintuitive, but Indian digital payments major PhonePe is chasing growth by facilitating cash withdrawals. For this, it\u2019s even hitch-hiking on offline retailers. The Walmart-backed platform launched PhonePe ATM service on its app on Feb. 5. 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