Digital payments are moving beyond the metros, and electronic payment corporations are positioning themselves for the change. With the pandemic prompting more people to strive 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) stated its share of transactions from tier-II, -III, and -IV places, which become around 50% in 2018, has expanded from 60% to 67% in the past six months. PhonePe said 70% of its transactions now come from tier-II, III cities and beyond, even as Freecharge stated its share of transactions from smaller towns is up from 3% pre-covid to 5% now.
Harshil Mathur, CEO, and co-founder, Razorpay, an online payment gateway provider to businesses stated that in the past 5 months, with people staying indoors, the demand for online payments grew by 40% in tier-II and -III towns. Earlier, customers 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.
Paytm Payments Bank has earmarked ₹100 crores to promote its point-of-sale device, Paytm Soundbox, in tier-II and -III areas, apart from introducing digital ledgers for service provider partners and a product to help small companies make bulk payments. In tier-II regions, customers can select to obtain direct benefit transfers on Paytm Payments Banks. It has also started focusing on the Aadhaar-enabled payment system.
Paytm Payments Bank stated it has signed up over 3.6 million merchants in rural regions. A spokesperson stated that efficiently, out of every three transactions on Paytm are achieved in a non-metro city. They have also doubled the number of business correspondents in smaller towns and cities.
Rural geographies are critical to PhonePe. If they have a look at a tier-wise break-up of transactions, over 70% of PhonePe transactions come from tier-II and -III. In July 2020, the company touched record monthly transactions of 620 million. payments normalized back to pre-lockdown volumes in June, however, for July, have seen a record spike.
This week, PhonePe stated it will boom its acceptance to 25 million small merchants this year, including kirana store owners throughout 5,500 talukas in tier-III and -IV areas.
BharatPe has been increasing its QR-based payments service in smaller cities and offering credit to merchants in partnership with non-banking financial companies (NBFCs).