With convenience factor on the side of digital payments, high growth can be expected in this segment. Differentiation would be a key for the digital players as it would enable them to touch maximum areas of the customer’s routine spend and convert that into a pleasant online experience. Oxigen Services, a payment solutions company active since 2004, has a footprint which makes for strong growth possibilities. Founder and CMD of Oxigen Services, Pramod Saxena outlines the business, company’s strengths and plans in a chat with Pankaj Joshi.
Can you quantify your ground presence?
Oxigen today has a reach of 1.30 lakh touchpoints at retailer outlets and another 0.70 lakh touchpoints through other channels, giving it an aggregate of 2 lakh touchpoints where walk-in transactions can be done. Our database comprises of 150 million unique customers whose monthly transactions stand around 50-60 million. Within this, 50 million are customers in the online/wallet category. The value of the monthly transactions is in the range of Rs 1,500 – 1,800 crore, inclusive of the other sources like trade channels or bank enablers.
How does Oxigen aim to harness the concept of mobile wallets?
We believe the concept of wallet is going to be a matter of habit sooner rather than later. The mental hurdle of transfer of money between wallet and bank account, has been overcome. We aim at conversion of store (touchpoint) clients to wallet clients. We have 30 million wallet installations, of which 25 per cent transact regularly. A very significant percentage of transactions is money transfer, which again reinforces the idea of acceptability.
Our approach is not discount-driven at all. We have got wallet installations not on the basis of discounts or freebies, but through satisfying the regular needs – remittances, cyclical payments for essential services and others. The wallet is there to address basic needs. Today, you are aware that 95 per cent of merchants in the country use cash. Our target is to create a footprint wherein we access 70 per cent of these in the next 2-3 years. The merchant goes from offline to online to the wallet. The customer gets his convenience and the government is happy because the proportion of digital transactions is going up. In the overall population of wallets, we lag slightly but our combined approach and our control on costs is what drives our numbers. We have reached an annual transaction level of USD 2 billion based on the customer putting his money into the system, without us providing freebies.
What are the emerging customer convenience requirements?
Today the customer needs options in payment modes. Post demonetisation, Aadhaar has become a central mode. Our installation at our retailer touchpoints is not just a POS machine but a mini ATM. This machine operates on mini GPS, has a biometric scanner, is connected to NPCI and Aadhaar enabled, which means the customer can use the Aadhaar scanner and then debit or credit the bank account of any bank. There is actual deposit and withdrawal possible in physical cash at each machine, with a printer providing receipts. Any customer can debit the bank account and credit utility payments in one go and get instant confirmation from the bank.
Regarding the different modes, the Government is promoting Aadhaar-based transactions which have the lowest cost. In the case of QR code access, we do not have a proprietary code, we follow the Bharat QR code protocol, which again gives the customer better options rather than others players like Paytm or Mobiqwik where there may be inter-operability issues. Our solution is a combination of micro ATM, the Bharat QR code and the UPI (which is being preferred by banks). Even non-smartphone users can transact through the USSB channel which is another low-cost option provided by telecom operators. So while mobile wallets are going to be popular, the fact is that there are 5-6 options beyond the wallet and you must be able to provide the customer with all those.
How big will digital payments become in the Indian context?
India is a big and complex market where options are needed. Certainly, there is no country in the world that provides so many options. We have made a giant leap in promoting digital payments at a national level. Six months ago, India had 1.3 million POS and today there are around 2 million, which is a rise of 50 per cent in six months. The target is 3 million in this year, and in terms of micro ATMs we estimate that in five years there will be 3 million micro ATMs on the ground in India.
How do you target your potential customers?
Primarily, we must aim for low-hanging fruit. Oil companies have been told to digitise transactions at their 60,000 retail fuel outlets. These are great locations for micro ATMs. The same goes for fertilizer industry, where the distribution channel has around 1 lakh centres. Micro finance companies are another easy target for Aadhaar-based collection and disbursement through micro ATMs at their estimated 2 lakh outlets in the country. Co-operatives (milk and other industries) have an aggregate estimate of 23 lakh outlets where they can substitute cash with digitised transactions. Then there are the large agricultural trade markets or mandis. This three-million target is definitely possible, it is all about execution. Also when you position micro ATMs vis-à-vis banks for the purpose of deposit and withdrawal of cash, it is a very convenient option. That too increases the deployment scope in a large way.
Here it is important to note that the proposed KYC norms for wallets will become a challenge for retention and growth, especially for players who have indicated a multi-million user base and now this base has to be verified.
What kind of growth can be expected in the future?
One big spin value proposition for the customer will be loyalty because the normal spend aggregation into the wallet will happen at massive levels. The opportunity is huge. As per Credit Suisse, the current size is USD 85 billion and it would be 10 times (USD 850 billion) by 2020. Today, transactions are 5 per cent in digital and 95 per cent in cash. In ten years’ time, we estimate that 50 per cent of transactions would be digital. Of the digital, 50 per cent would be through wallets and the remainder through cards, UPI, Aadhaar and so on. This is exactly the blueprint on which Oxigen is laying out its forward plans. Our current investment in infrastructure is Rs 500 crore, and we foresee a further investment of Rs 1,200 crore in the next 3-4 years.
