October 5, 2015
There have been a number of service providers trying to get the larger share of wallet transactions. At LTP, we have been tracking this space. Recently, we had an opportunity to talk with Ankur Saxena, the CEO of Oxigen Wallet, about how their company views the mobile payments market and their penetration strategies. Oxigen was one of the first wallet solutions to be launched in India and has a large retail network of more than 200,000 outlets.
LTP: According to you, what would be the selling point or a POD between Oxigen and other wallet solutions like Paytm, MobiKwik, etc.? We believe the one difference could be social payments, but how do you view that market in India?
Ankur Saxena: Oxigen came up with the concept of OxiCash, one of the first digital wallet solutions in the country. We launched it in 2008, long before RBI came up with a PPI license concept. We have been at this for a very long time and the formation of this business was to primarily enable payments at retail or at offline locations. We basically aggregated retailers and merchants at one end, customers at another end and allowed a walk-in customer be able to pay using their wallet for certain services. As a B2C wallet solution, we had to put it in the back burner as it was too ahead of its time and RBI had asked us to slow it down before they formalized things. In 2013, we connected with NPCI to facilitate wallet-to-bank money transfers. Once again, we were the first or second nonbank entity to facilitate wallet-to-bank money transfers then. We didn’t launch that service directly to consumers, but through our retail footprint in 2013 (which got a lot of traction) and today, we do around $100 million GMV of remittance on a monthly basis. As this was at the retail end, the growth was a bit slow wherein a consumer would walk in and the retailer would assist in opening the wallet for the consumer and educate them in its usage. In 2014, we relaunched the wallet as Oxigen Wallet where we started selling the wallet directly to the consumer and that’s when we launched social money. Social money is definitely something that would take time to ramp up but would keep the customers amazed with its ease of use. But we don’t believe that social money is the biggest differentiator. The biggest strength is our infrastructure; the retail infrastructure we built in the last 10 years. We have close to 200,000 outlets connecting to us which give us a great amount of reach in the market. In our view, the biggest use of wallets is to digitize cash; the 94% cash transactions in our market and to facilitate that to become digital, and allow them to transact digitally is the main reason for the existence of wallet solutions. We have been in the business and it’s not easy to manage retail. It’s a very complicated, tough business to be in and that’s why not too many players are out there. Everyone started by creating solutions for the consumer-end of the spectrum and now, building their retail base. But we started on the other side and that should give us an advantage.
LTP: Do you have any tie-ups with third-party payment gateways or processors or do you believe in building it fully in-house?
Ankur: Currently, we have partnered with PayU for the gateway and we use their services. We also partnered with a few others and are internally developing the load balancing and redundancy in the back-end so that the system decides which gateway to use. Eventually, we will have our own gateway that will power these, but it’s a phased process. Probably we will do it next year. It will give us a lot more control end-to-end. The way we look at it, the cost of having a third-party payment gateway compared to our own solutions provides a very nominal difference. It’s more about the flexibility and control in managing issues reliability and giving a more flawless experience to the customer.
LTP: Could you give some statistics on how many customers you have, the total transactions and value?
Ankur: Overall we have around 9 million users but not all of them are app downloads; a lot of them are from the retail assisted model. As far as app downloads, we would be close to around 1.5 million. We are pushing that aggressively. As we said, we launched it a year ago and we are continually improving it based on customer feedback. From a transaction volume perspective, we have non-wallet and wallet transactions and we process close to 2 million transactions on a daily basis, and in GMV terms, around 2.5 billion in FY’15. Among these, money transfer to the banks is the biggest followed by recharge/telephone and we want to push bill payments more in the future.
LTP: Are you also looking at increasing your retail payments penetration or acceptance of wallets at retail outlets? How is that section shaping out?
Ankur: We have a focus and targets on that as well. Again, we were the first to partner with CCD and to provide retail offline payments with a wallet. We had some learning there and now, we are reworking on the process flow to make the user experience better and reduce the friction in the payments. While we are working on that, we are going to very aggressively go out into certain segments for offline payments like FMCG and convenience stores. Our plan is to easily activate another 20-30K outlets in the next 12 months which are not already part of our network. So the reach for the existing 200,000 outlets already enabled but we haven’t promoted the process well. We will promote that 200K and add the new 20-30K in the next eight to nine months. We are also working with certain POS aggregators to increase overall reach.
LTP: You had applied for a payment bank license, but that was not successful. In that context, how do you now plan to use the merchant base that you have created? Apart from being a cash-loading facility, do you plan for any other value addition?
Ankur: We definitely hoped and thought that the existing merchant base would be a sheer differentiator among everyone who applied for the license. Nonetheless, we always had a plan A and plan B. Plan A was if we get the license and plan B was to work with a bank. The difference is that with a payments bank license you have more flexibility with the user ownership that you get versus that of a shared ownership. However, we are going to work with a bank and provide the same level of services that a payments bank entity could provide with the license. Digitizing cash can only happen with physical distribution and we will use our retail network as a cash-loading point. Also, we want to further utilize that footprint to provide certain value-added services for e-commerce companies in regards to distribution, like cash before delivery rather than cash on delivery and thus, eliminating the typical costs of cash on delivery.
LTP: Although we understand that freebies are a way to educate the customer, how do you think wallet adoption would vary once the offers or freebies are moved out?
Ankur: I guess it has gone beyond the education phase and we are getting the users to a habit where he/she only wants freebies. With the freebies pulled out, the adoption as it stands today will be dropped. From my perspective, the biggest proposition for a wallet is people who really needed digitization of cash and more locations to spend this wallet money. If one is able to provide more value for the customer without using freebies, then that would be the real driver for adoption. We would need people who are not very comfortable with credit cards and all of that to drive wallets, and you will see an upward swing if that segment is enabled. The existing wallet solutions are being used as a replacement of cards and not for cash. However, at the same time, they are getting people educated in using mobile money.