Paytm, which claims to have over 158 million customers in India, has today announced an update which brings Point-of-Sale (POS) capabilities to the app. Essentially it will function as a virtual POS in shops and stores where a user can just rely on the merchant’s smartphone to enter their card details and make a payment when a POS machine might not be working or is not present.
Paytm claims they are signing up close to 40,000 merchants a day and they expect this number to hit 70,000 per day after the launch of the feature. The company has tied up with Citibank for the same. Till December 31, Paytm won’t be charging merchants any fee, but it hasn’t clarified what will happen post this time period.
Also for now merchants have a limit of Rs 50,000 per month on transactions via wallets like Paytm etc. This limit applies only after they’ve done a self declaration as a merchant as per RBI’s latest guidelines which were issued yesterday. However, Paytm says it is reaching out to merchants to help them get verified officially with proper documentation in order to make their monthly transaction unlimited.
“We are on a mission to democratise payments and empower even the smallest merchants to be able to accept credit and debit card payments from their customers. We are very proud that we are able to contribute to the digitisation of our economy,” said Vijay Shekhar Sharma, founder and CEO of Paytm at the announcement.
For now, Paytm’s POS is limited to those merchants who have a smartphone, a working Internet connection and the app. After a user has a typed in their card details, Paytm takes them to the bank’s website for the two-factor authentication, and the user will have to enter their OTP in order for the transaction to get verified.
So in essence a user will have to rely on the bank’s network for the transaction to get through. As the demonetisation drive has shown, bank servers have been struggling in the last few days. As a process, Paytm’s POS also involves a lot more steps and is not exactly seamless as say Apple Pay or Android Pay in countries like US, UK etc which are single action payment solutions. However, these are not possible in India due to RBI guidelines. Paytm says the merchant does not get to store the card information of the user.
Merchants will have to self declare themselves as a business on Paytm, give bank account details, and then start accepting all debit and credit cards. For credit card transactions, Paytm has a 2 per cent fee for merchants.
But Paytm’s Vijay Shekhar is confident this will boost digital transactions in India. “India has only 1.4 million POS machines. There is only one POS for every 1785 people in the country. With Paytm’s POS app it will rise to one POS for every 120 Indians,” he claims. He adds that they expect over 10 million of their app POS transactions to take place this weekend alone.
Paytm claims to have seen a huge boost in the last fortnight with daily user growth at 500 per cent and the company is confident that it will do 2 billion transactions by the end of this year. The mobile wallet says people in metros have increased their daily transactions to an average of three per day, which is a big jump from the four a week.
As far as usage goes, Paytm claims it has the highest traction in Hyderabad, and Chennai followed by cities like Delhi, Mumbai and Bengaluru, (not in that order). The company says it will target more people in tier two and tier three cities to boost user base.
Incidentally, Paytm’s announcement comes on a day when Airtel’s Payments Bank has been announced. Sharma said they won’t be giving a timeline on when their Payment Bank, which was supposed to launch around Diwali, will go live.