CATALYST'S DIGITAL PAYMENT JOURNEY IN JAIPUR FIRST STOP - BARKAT NAGAR
By Sapna Bharath
Digital payments uptake by small merchants is a stepping stone to broaden financial inclusion. Integrating these small merchants into the digital payment eco-system is an imperative need and critical element to realise the vision of a cash-light economy.
Catalyst has established a Digital Payment Lab in Jaipur to formulate experiments, learn through an iterative process to institutionalize scalable and demonstrable templates for large-scale implementations. Catalyst organised a ‘Digital Payment Shivir’ in one of Jaipur’s bustling market – Barkat Nagar, to handhold merchants into initiating a digital payment value-chain. The open-to-all camp is one of the first experiments of the Digital Payment Lab that endeavored towards educating, facilitating, onboarding small merchants and low-income consumers into the digital payment eco-system.
The experiment kick started with a week of feet-on-street activities, shop-to-shop campaign to educate and understand merchant’s solution choice and culminated in a 3 day long camp (Shivir), at the main market area at Barkat Nagar.
One of the key objectives of the camp was to evaluate the most viable, suitable solution out of the varied options available for the fixed store merchant segments and importantly, to also analyze the intrinsic barriers to adoption. Catalyst’s formal agreement with the Government of Rajasthan and their formidable support significantly helped the efforts of this experiment in building strategic partnerships with Digital payment solution partners & banks such as EPaisa, FTCash and AxisBank.
WHY BARKAT NAGAR?
Major market in Jaipur that stretches to about 1.5kms with pre-dominant presence of specialised stores dealing in apparel, general and books with presence of 600+ merchants
Majority of the population is engaged in business or service and predominant income digitised, thereby breeding digital payment familiarity
Strong youth presence in the area with a presence of around 20 schools, 6 colleges and 15 coaching centres in the vicinity; make for ambassadors to promote digital payments
Fair penetration of wallets by merchants indicating pre-existing digital payment awareness and familiarity
Surrounding residential area with approx. 6000 households to tap on consumer literacy needs
MERCHANT CAMP FORMAT
The month-long merchant camp that kicked off in mid-March camp comprised of 4 key milestones, encompassing preparation, execution and post-camp learning activities.
Shared Lead Generation
- Training on in-scope digital payment solutions to Catalyst’s field staff
- Shop-to-shop awareness across appx 400+ stores for interest assessment and survey
- Opportunity for self-selection of solutions based on a solutions-to-features comparison matrix
- Leads consolidated and handed over to Solution Partners
3-day market Campaign
(Solution partners & Chai Chowkis)
- 3-day intense awareness drive through Solution partners’ fixed kiosks at Barkat Nagar’s library
- Chai-chowki beats across market streets to increase camp awareness
- Solution partner’s feet-on-the-street team engaged in pursuing leads handed over by Catalyst
- Assisting on-the spot on-boarding/sign-up and activation*
(*for specific solutions)
Leads follow-up & conversions
- Pursue activation of solution post sign-up (subject to KYC clearance)
- Close ‘post-camp’ pending and open-leads
- Addressing activation related grievances and solution trouble-shooting
Post decision interviews
- Feedback from adopters & non-adopters
- Inputs from Solution partners
- Analyse adoption and usage behaviour
- Catalyst and GoR’s partnership derived a ‘brand’ for the merchant camp which sought trust and credibility from merchants
- A solution-wise feature and price comparison matrix presented to the merchant during lead generation enabled self-selection of solutions
- Support from local market association and mediation increased the participation from merchants entrusting value in the initiative
- Shared lead generation activity optimised feet-on-the-street engagement for solution partners and provided them focussed channels to pursue adoption
Payment Service Providers at the camp: EPaisa, FTCash, BHIM, Axis Bank NBFC Partners at the camp (in partnership with Solution Providers): Indifi, Capital Float
SOLUTION OFFERINGS COMPARISON
*published as of March 2017
Supporting collateral of the comparison matrix below was shared with each merchant as part of the lead generation exercise to empower their decision making in choosing a solution that best meets their business requirements and comfort on total cost of ownership. A walk-through of this table by the field staff to the merchants helped streamline their choice and indicate targeted exploration of solutions at the 3-day camp.
Source: Catalyst-IFMR LEAD, Jaipur Needs Assessment Study (2017)
MULTI-SOLUTIONS: LEADS TO CONVERSIONS
The main aim of the experiment was to gauge merchant interest in adoption & acceptance of digital payment solutions and provide them an opportunity to self-select solutions based on their business needs through a shared lead-generation model. The intent of the experiment was to also evaluate if shared lead-generation and acquisition was an optimal, effective and scalable “go-to-market” model.
Catalyst’s field staff canvassed the lead generation exercise through 422 merchants out of 600 in the Adarsh Nagar market area (the remaining were dormant or non-existing businesses). Merchants were briefed about the proposed 3-day ‘Shivir’ that was lined up and how their businesses could benefit by increasing their digital payment acceptance. Supporting collateral such as brochures on digital payment types, benefits, solution features versus pricing comparison notes and a letter of encouragement from the local market association head drove higher interest and response rate from the merchants.
Key take aways from the lead generation exercise:
- The market was largely dominated by Speciality store segments dealing in businesses such as Apparel, Books and Convenience store segments such as grocery & general stores.
- Around 14% of the merchants in the Adarsh Nagar market at Barkat Nagar were on-boarded onto an interoperable digital payment solution such as PoS and mPoS for card acceptance.
- Around 156 merchants of the existing wallet-accepting merchants expressed interest in exploring interoperable solutions that were presented as part of the lead generation activity.
- The week long shop-to-shop lead generation activity resulted in approximately 93% of merchants willing to explore solutions that were presented at the camp.
*Data source as of May 2017 and subject to small sample bias
Reasons for adoption:
For mPoS solution:
- Customer demand largely influenced adoption
- Lower cost of trial when compared to traditional PoS triggered interest in trialability
- Ease of use of the solution was an influencer
For web-link solution:
- Was an attractive option with no upfront/sign-up cost and was adopted by merchants who were willing to experiment digital payment solutions and evaluate its
Reasons for non-adoption
- Lack of consumer demand to pay digitally
- The market sees a higher ratio of consumer preference to pay cash at the point-of-sale
- Merchant’s unwillingness to bear upfront cost, thereby reducing his opportunity for trial and experience
Reasons for low solution activity
- Less than one-month period post activation of the solution at the point of sale
- Certain app-centric solutions required re-training for merchants to gather familiarity
- The transaction time taken for web/link based solution was inconvenient to merchants due to the time taken to complete the transaction
Data insights from the lead generation exercise indicated that those merchants who had experience/ exposure to digital payment solutions before showed higher interest to explore other market solutions. Similarly, post-camp insights indicated that the adoption numbers of merchants with pre-existing digital payment solutions was twice as compared to the merchants who were new to the concept.
A post-camp activity was conducted on sampled merchants to validate reasoning behind adoption or non-adoption of the solution. The insights indicated that the adoption of mPoS solution was largely driven by customer demand, as the merchant experienced a footfall of consumers who were keen to pay by card. Merchants were also open to trialability for solutions as there was no upfront cost invovled. The key reasons for non-adoption underlined the fact that customers who made purchases were habituated to pay cash and a targetted behavioral shift experiment can help assess the change in payment behavior and evaluate the prudence for sustained usage.
BHIM: LEAD GENERATION TO CONVERSION
BHIM, a UPI-based solution that promotes instant bank-to-bank transfer was exhibited at the camp to spread awareness about UPI payments and their benefits. A chai-chowki (tea-cart) was stationed at a strategic point at the market-place which gathered the curiosity of merchants, provided demonstration to activate and initiate a payment transaction to increase familiarity. The 3-day camp gathered a total footfall of about 86 merchants and were assisted in on-boarding and activation.
While there was ample interest in solution adoption as it is cost-free for a peer-to-peer transaction, only 70% of the merchants attempted to activate themselves on the BHIM App with eagerness to transact of which more than half of them (28 merchants of 86) were successfully on-boarded and ready to transact. A large set of registrations/ activations failed since mobile numbers were not linked to bank accounts and the remaining faced debit card issues such as not carrying debit card and unawareness of expiry date details.
Following the merchant camp, a wave of feedback was conducted with sampled merchants who adopted BHIM to analyse their reasons for adopting BHIM and to assess their current transaction activity. The survey indicated the key reasons for adoption of BHIM was the zero set-up or transaction cost and ease-of-use of the solution. The merchants however indicated that the awareness of UPI amongst consumers was low, thereby creating lack of customer demand at the point of sale.
Adoption, Solution Usage data and post-camp feedback from both the adopter and non-adopter merchants led to some actionable insights. These learnings were categorised under:
- Solution & Business Model Relevancy to address which were the right solutions that suited the relevant merchant business/segment
- Go-to-Market Model to define the most optimal and effective way of reaching out to small merchant community that can be scaled-up for wider implementation
- Drivers for Sustained Usage that will aim to refer to factors that influence sustain or regular use of digital payment solutions thereby helping the transition to a cash-light eco-system
These learnings have been mapped to Implications for action highlighting the upcoming opportunities for study and experiments on-the-ground for the team, emphasising the overall merchant behaviour and acceptance towards digital payment solutions.
Implication for Action
SOLUTION & BUSINESS MODEL RELEVANCY
- Zero sign up cost and low/ zero monthly rental critical influencer for signup
- Small merchant unwilling to pay additional for value-add features (e.g. billing, inventory, analytics) for initial adoption
- Provide payment solution as per merchant needs without focusing on value added services initially
- Prioritize solutions with zero signup and low monthly rental
- Test pilot pricing models
GO-TO MARKET MODEL
- Digital payment and solution information useful for merchant
- Government and local market association support built trust in merchants
- Shop-to-shop campaign & shared lead generation for mid-low income market generated conversions in-line with mid market benchmark (~10%) but it is not a scalable model
- Evaluate information dissemination and lead generation through automated IVRS and e-Mitra enabling cost effective scalable model and leveraging local trust and community proximity
DRIVERS FOR SUSTAINED USE
- Customer demand and solution awareness important for driving usage
- Preference of cash embedded strongly in merchant and consumer
- Trialability important for merchant to build sustained adoption and usage
- Solution applicability and ease of use
- Enable trialability for merchants through zero adoption cost supported simultaneously by incentives for merchants and consumers to drive usage
- Drive significant adoption and usage within a geography to drive network effect
- Assess a model with merchants as change agents to influence & drive consumer usage
As a culmination to the first pilot in Jaipur, data insights and learnings from the digital payments lab indicate that small merchants are largely appealed by digital payment solutions that have minimum or no cost and attest solution simplicity for acceptance & adoption. The inferences highlight the criticality of increasing consumer awareness of digital payment acceptance at merchant stores alongside the need to devise methods to influence behavioural shift of consumers from cash to digital. Catalyst proposes to roll-out deep dive studies and pilot to address these challenges and stimulate & analyse sustenance measures for merchant acceptance and consumer usage towards digital payments.
Also published on Medium.