In the process of building a movie tickets platform, the BookEazy team stumbled upon a revelation of card-less digital payments. We weren’t the only ones to come upon this discovery. And yet, its taken eight years for the digital payments freeway to become a potential reality. I believe that this is an important, polarizing discussion as it offers the ability to permanently close the larger digital divide in India.
Card-less Movie Tickets Online, April 2006 to 2009.
When working on getting BookEazy live we framed the problem of movie tickets in simple terms. We wanted both students and knowledge workers to be able to book their movie tickets via mobile SMS without using plastic. This was before net-banking had become possible and only a small portion of the urban population were card-enabled. An offline method, Cash on delivery was on the horizon and multiplexes had begun offering home delivery of movie tickets to movie-goers.
BookEazy cofounder and CEO offered a solution. Inspired by how we rent movies and Inox’s cashless “reserve a movie ticket by SMS and show up 40 mins before to collect them”, she suggested – why not take that idea to the next level? We then designed a cashless system which allowed movie-goers to reserve movie tickets against a security deposit and show up at the theatre to collect their tickets any time before the show.
We built over several assertions, selling ~1CR of movie tickets in Pune. Some turned out to be true, while others turned out to be false.
- We got the mobile-only use case bang on right and ported the system to work not only with desktops, but with SMS transactions and mobile browsers. But we were too early for smartphones and native apps.
- Urban debit and credit card penetration has grown significantly since then. I can imagine more than 60% of a site’s transactions are card based (with a 3 to 1 factor in favor of debit cards to credit cards).
- We were on target for the “impulse buy” use case. By eliminating the card altogether from the workflow, our movie-goers booked more often than box office average in a year.
- We weren’t able to onboard Students as well as we did with Knowledge Workers who valued convenience over price .
E-Payments Develop, 2009 to 2012.
The years that followed, were relatively quiet years for payments, overseeing the development of card gateway infrastructure and other channels such as cash on delivery, net banking. Since 2012, Flipkart and other ecommerce sites drove the development of the e-payments infrastructure. Oxigen and One97’s PayTM were two outlying payments services that continued onwards through this time.
The other key building blocks that solidified during this time are inexpensive smartphones and ubiquitous saturation of mobile internet. As we’ll see further – these will have a significant say in the development of our digital payments freeway.
Wallet Services, 2012 to 2015.
For comfort I’ve always stayed with prepaid mobile cards. Recharging them with my local kirane-walla (local Grocery store) hasn’t always been convenient and so began the search for an online solution. My earliest prepaid recharges with PayTM culminated from the frustration of trying to recharge directly with the operators website (AirTel, TATA DOCOMO, Idea). Initially, PayTM recharges were restricted to the desktop with a credit card. Subsequently, PayTM launched their Wallet service and app for iOS and Android.
The original insight for a Wallet service comes from prepaid users ‘lending’ each other minutes  of talk-time (or credits, if you will). Which also explains why the growth of M-PESA a mobile wallet service in Kenya was led by a telecom operator and not a bank.
It makes sense for PayTM to have mobile recharge as a captive service . Even if there appears to be a contradiction between the Wallet service target demographic (prepaid customers) and the channel favored (smartphones). Students are perhaps a unique target demographic where both attributes happily co-exist. Explained another way, students are both – heavy users of smartphones as well as prepaid services.
On the flip side, at least one source directly cites unfavorable regulation as to the reason why Wallet services haven’t developed in India . Fast forward to today and we’ve got a plethora of Wallet service providers here in India led by first-generation wallet services, banks and others with a desire to bank the unbanked and the underbanked .
The creation of a nationwide digital payments freeway has implications for e-commerce and others. For instance, students now can now be included under digital payment channels making it possible for them to be a higher margin demographic and offer a greater lifetime value. On a longer timeline, Wallet services can potentially digitize common small-value cash transactions and simply unite the larger India.
 Product plans must pursue a target demographic with a desire to make it possible to replicate their success.
 Mobile Banking: Financial Services Meet the Electronic Wallet, Knowledge @ Wharton and Ernst and Young.
We’re going through a significant degree of change here in my home country. As far as historical trends go, this is the fastest pace for any change and we squarely blame technology for what’s happening. Oddly, one might live through an entire decade and yet not notice this change.
In a conversation last night with a friend, I learned a great deal through his outlook on how things are shaping up. His family is talented and have many gifts to share with the world. His Mother’s written several cookbooks and has deep insight into to food and lifestyle choices we make. He himself intends to create a niche portal to service pets.
Another friend of mine who has been tracking the growth of e-commerce in the United States from inside the industry alerted me to what’s actually happening here. While today, valuations are driven by captive e-commerce infrastructure, the more reliable metric is still lifetime value of the customer. Flipkart, Amazon and the other incumbents are essentially responsible for developing the long tail of e-commerce here in India*. To help understand the scale of change that’s needed, the contrast you need to grasp is that for every one e-retailer in India, there’s essentially a 1,000 and more in the US.
Another segment that’s changing rapidly are B2C services in India. They directly stand to benefit from the digitization of the last mile between the business and its customer thanks to mobile internet.
On my way to work, my auto driver started up a casual conversation with me. In the midst of the conversation, he asked me if I knew that Ola cabs had enabled auto drivers on their digital service. I had indeed. He then politely asked me if he could have my number to refer back to Ola and claim a reward of a hundred rupees. I said I’d gladly share and sign up.
Those drivers who go out and get themselves a tourist cab might opt-in to Uber and a myriad of other services. I can now hail a cab or an auto within 15mins no matter where I am in Pune. This is especially helpful late nights and in the outskirts of the city.
One place I can see where this’ll help is at our local airport. If you talk to the prepaid autos at the airport, they’ll often charge 1.5x to 2x the fare back to the city. The cops there don’t want to do anything about this as they’re looped in on the take as well. The justification for the premium is that all auto drivers need to pay a fee to enter the airport (to whom?). The next time I’m there I’m going to try hail an auto for myself using the App from outside the airport. I hope that’ll work.
The question “What’s the next $Bn startup out of India?” just got a whole lot more interesting!
* I am what one might call a skeptic, but its hard to argue against overwhelming evidence and specifically Amazon’s decision to permanently set up shop here having patiently waited since the mid-2000’s.