Wild Wild West of Indian Payments

What’s common between TrueCaller, Amazon, WhatsApp, PayPal, Samsung and Modi?

All have been in payments related news in past one month. Payments in India is the biggest opportunity today, it’s bound to grow massively and its landscape is undergoing huge structural changes.

It has thus naturally attracted many companies and bewildered many observers, upsetting their thesis around the space. Many who bet against UPI (the new gold in Wild West) are left scratching their heads and many who thought that any payment play was over, are now deep diving to understand how it will pan out.

In analysis of this crazy Wild Wild West landscape filled with many tornadoes aka companies running into each other, a top level analysis using a myopic lens won’t suffice. One will have to get rid of any curse of knowledge and develop deep empathy towards what a user needs and how one can provide that to him in a manner nobody else can.

Understanding why a user will use a product, choose it over others will make sense only when we understand who the user is and what role payments play for them.

Consider three users - one in Mid-30s, another in Mid-20s - a digitally transacting urban millennial and then a tier 2-3 city resident. They all have apps on their phone such as a bank app, PayTM, BHIM and WhatsApp. As all of them provide or will one day provide P2P or P2M payments with UPI, it all comes down to what value you provide to the user that none of these apps provide or can provide due to their difference in focus or product debt, legacy debt, positioning debt and so on.

You need to have a clear value proposition for your target demographic and the only way you can provide them an unmatched, truly differentiated experience is by being extremely empathetic to the contexts in which they carry out payments.

The mid-30s will continue to use say a bank app for infrequent once or twice a month bank transfer, so will socially inactive millennials or Tier 2-3 users who can carry out the same commoditised UPI transfer today on BHIM and tomorrow on WhatsApp or other platforms.

For example, our users on Mypoolin, who engage with their flatmates, coworkers and classmates for multiple social use cases such as dining, travel, gifting, movies, events, activities and more, it is a complex many to many mapping of different cluster of friends with multiple social use cases where they need to collect, settle and manage payments with friends in multiple different contexts which go beyond basic functional payments.

What matters is what value we provide on top of UPI differentiating ourselves and positioning ourselves differently to build a network with moat on top of it. That network is created by a social payments category creator, the timing for which is spot on post launch of UPI - India’s PayPal moment and demonetisation that accelerated market education making it conducive for the only large economy in world deprived of a social payments story to now see one getting scripted.

No business will own UPI, what businesses will own are the use cases on top of UPI.

The social payments for these users is not about a money transfer mechanism or book-keeping, it is about keeping things on an even keel with their friends - where they want to project a certain outlook while being socially active and yet want to manage personal finances in a prudent manner.

Hence, by deriving from use cases for a user, we need to redefine our understanding of many aspects of payments. For example, social payments is not about putting a commoditised UPI on a social network with large distribution. It is about understanding social payments and contexts in which they are carried out and providing an unmatched experience where users do not even feel they are making a payment.

Social networks aside, all wallets that tried social payments where they thought just introduction of a bill splitting feature makes it a social payment failed miserably, few after burning millions of dollars in expensive ATL campaigns.

In our observations in past 4-5 months, users who have started using UPI think of it as a direct replacement for bank transfers using net banking and use it for same infrequent bank transfer use case such as salary transfer or sending money to relatives.

What’s still lying as an inactive shadow market is all latent P2P for all social use cases that no one is educating users about and building amazing product experiences around.

Similarly, there are multiple other ways value can be built using UPI as the base where different businesses will harness their own advantages whether it is a large network or hardware.

The irony that resides at core since time immemorial and is valid today as well in the fastest growing payments landscape in the world is that no living being likes to pay, no one. Yet, they have to but that doesn’t mean it has to suck or it can’t be turned from less painful to something diametrically opposite - pleasurable!

That’s where we hope India and companies here will create payments products and experiences for large masses that we have never seen before.