THE VIEW FROM 10 MONTHS IN…
By Badal Malick, Catalyst, New Delhi
Change is not only plagued with uncertainty but also ambiguity and it has many versions as it unfolds. These versions may look different depending on the vantage point, but when we connect the dots a common narrative starts to emerge. At Catalyst, we go through this on a routine basis and celebrate the process of iterative learning to design, improve and innovate. Through this blog post, I want to give a glimpse into our journey with the hope to share the energy and excitement that drives us.
We, at Catalyst, now have three distinct engines of activity, coordinated in a manner in which we hope their sum will be greater than its parts. Our Digital Payments Lab involves implementing a set of coordinated initiatives in a local geographical ecosystem to shift consumer, merchant and supplier behavior from cash to digital payment transactions.
A resolute focus on the last mile
One of our foundational principles has been to leverage the “digital transaction” as a stepping stone towards financial inclusion, by creating value for and empowering the “Bottom 80” of society.
This is the strand that runs through our “Digital Payments Lab” initiatives. It’s embedded in the hyperlocal context of our work across dense commercial markets, merchant-supplier networks, and broad-based consumer communities, especially the youth. The solutions created, operationalized and validated through the lab are being be leveraged for further innovation, policy engagement and scale.
We believe, to drive true ecosystem level impact, we need to understand complex stakeholder relationships, transactional flows, and the understated but critical nuances of behavior and internalized habits. In the coming days, we will continue bringing you a rich stream of insights from our experiments, research, and conversations done to better understand needs, mindsets, and motivations related to digital payments.
In Barkat Nagar’s Adarsh market, we’ve now conducted several merchant and consumer facing experiments that have shed light on the untenability of a stand-alone small merchant acquisition model. In effect, we are preparing the ground for a simultaneous merchant and consumer focused initiative, especially one where consumers can be nudged at the point of sale.
Tapping into federated merchant networks that provide high frequency products & services to large pools of Jaipur’s resident population has been another goal. In the case of eMitras, we have successfully influenced the State Government to integrate UPI on its platform at a charge of Rs. 2/ transaction (vs. a prohibitive 1% convenience fee that is inevitably passed on to the consumer) and link digital payment penetration to a performance criteria that defines revenue sharing. These changes would apply to 52,000+ e-Mitras across the state, which jointly account for Rs. 400 cr. in monthly transaction volume! Soon, we will extend our urban lab to a low-income slum tenement, where we have started working with Self-Employed Women’s Association (SEWA), as well as to dairy distributor and merchant networks.
Catalyst is also developing a mass awareness and engagement campaign in Jaipur for a sustained shift towards a less cash ecosystem. This campaign, under the current banner of “Each One Teach Many (EOTM),” aims to recruit young citizens to help change perceptions towards digital payment and handhold people onto digital payments. The campaign, will be implemented with key partners like the National Payments Council of India (NPCI) and Facebook. At the moment, a college-focused leg of this campaign is being tested on the BIT, Jaipur campus with active participation from students.
The partnership with the Government of Rajasthan remains as strong as ever. Apart from their institutional support and co-branding on the above initiatives, we are supporting them in the design and implementation of open loop, interoperable digital transit payment solutions across four smart cities – Jaipur, Ajmer, Kota and Udaipur), and on certain rural digitisation initiatives.
Policies, Partnerships and Learning Dissemination
Catalyst was conceived as an idea driven by multiple stakeholders coming together to achieve the common goal of promoting usage of digital transactions through both innovation and policy channels. We remain committed to this role and every process we initiate is focused on passing on the learning through dissemination of ideas, experiences and implementation insights to larger audiences for wider change.
On the policy front, Catalyst is working closely with key Government agencies like the Ministry of Finance, Niti Aayog and MeitY (Ministry of Electronics and Information Technology) to support their agenda to scale digital payments. Specifically speaking, we’ve provided Niti Aayog ground level insights on BHIM linked incentives, and have been instrumental in influencing legislative frameworks on regulatory sandboxes starting with our support to the Watal Committee. We have started an engagement with MeitY, which now houses the National Digital Payments Mission, as well as Niti Ayog, to share learnings from ground level operations and recommend ecosystem digitisation strategies that evidently work. Our policy advocacy footprint will only expand as our experimentation goes deeper.
We have partnered with specialized research agencies to create new and much needed structured knowledge on DFS space in India by embedding their research programs in our operations. For example, we are working with People Research on India’s Consumer Economy (PRICE) to understand current payment/finance needs, context, behaviors and perceptions, across 3000+ local merchants and consumers. We have also engaged a behavioural psychologist to conduct deep experiential research on small merchant segments, and have plans for in-depth study of incentive design and digital credit linked to payment flows.
We regularly organize FINposiums and Roundtables to influence broader discussions on digital transaction ecosystems, covering multiple perspectives and partnerships. These events have also emerged as platforms to showcase and reflect on our ongoing studies, learning and collaterals.
Catalyst's path to sustainability
While our lab activities tend to be operationally intensive, based on these learnings, we are also beginning to invest in models and technologies that are replicable and scalable.
This month we’re excited to be launching our incubator - “Fintech for the Last Mile” - to support visionary entrepreneurs focused on solving real “Bottom 80” problems and thereby address existing product gaps we come across in our course of work. For this we have lined up a fantastic set of strategic partners including marquee VCs, impact investors, tech companies, FIs, industry associations, and incubators, along with a set of key mentors. And we’ve started receiving interest from many exciting last mile innovators!
We’re also excited to be launching a first-of-its-kind systematic program to test & validate a business model that mutually reinforces uptake of digital credit and digital payments.
This involves working with strategic partners - both lenders and PSPs - to disburse starter credit and top up loans based on the achievement of certain digital payment milestones, and integrating a research lens to quantify the value of such a proposition and its longer term impact on small merchant economics. While South East Africa has been a hotbed of such innovation and research, its time we assessed these models in India.
Will be back soon with the next blog on what’s keeping us busy and how this transformation journey is unfolding.
Meanwhile, please keep reading the website and social media posts. And do send us your feedback and thoughts!
Also published on Medium.