Digital payments in India reported a record high in 2020 with all channels from the Unified Payments Interface to the Aadhar-enabled Payment System (AePS) registering significant growth. The covid outbreak, which induced a lot of challenges for several industries, helped the growth of digital payments in the country. This synced with Centre’s target of touching ₹4,630 crore for digital payments in 2020-21. In a bid to under the digital payments segment and the transformations it is undergoing lately, Rashi Aditi Ghosh of Elets News Network (ENN) spoke to Manas Mishra, Chief Product Officer, PayU. During the exclusive interaction, he said that the onset of COVID and changes in consumer behaviour propelled businesses to digitize their payment solutions and business operations. PayU witnessed a 2X increase in GMV on its payouts platform in the past 6 months, and there has been a 7.5X increase in the number of merchants onboarded between January and July 2021, he added.
Excerpts of the Conversation:
1. The digital payments industry is dynamically growing amid the pandemic. How has PayU evolved post the outbreak?
Black swan events like the pandemic have created a seismic shift in the digital payments landscape, propelling its growth like never before. As customers have become more attuned towards contactless payments, merchants have responded to new necessities by adopting versatile digital payment solutions to stay ahead of the curve. To meet emerging requirements and differentiated needs post-COVID, PayU launched and leveraged contactless payment solutions such as PayU ePOS, Bharat QR enabled solutions, UPI mandate, enhanced Payouts suite, to name a few.
PayU bolstered its omni-channel payment solutions to help merchants accept payments through online and offline (e.g. in-store, at home) channels and across touchpoints. In fact, the omnichannel team received 15X leads compared to pre-COVID times. Responding to customer and merchant needs, PayU also strengthened credit facilities at the point of sale to enable consumers to pay on the go and stimulate purchase power. With our strengthened payments play and targeted initiatives, PayU witnessed a strong 40% year-on-year growth trajectory.
2. What challenges and opportunities do you see, in particular, in the frictionless payment segment post-COVID?
The future of digital payments lies in providing a simplified and secure user experience. As mobile apps and mobile-friendly websites have proliferated and as we have new user segments starting to adopt digital payment, merchants are eagerly looking for solutions to provide a seamless, cohesive, unified payment experience to their users as that will be a key differentiator. Customers want a digital payment journey that is swift, secure and convenient, and therefore this is a key focus area at PayU. For example, PayU’s Native OTP flow helps the user to stay on the merchant’s website/app and completes the Card authentication process of entering OTP on the merchant website itself, rather than redirecting the user to a 3d-secure page to complete the transaction cycle. Native OTP flow improves success rates of card transactions at least 3-5% or more, depending upon the source of transactions. PayU, working with Wibmo(an entity that is a part of PayU now), has created an ExpressPay flow – a server-to-server API-based authentication solution – that helps PayU power this native OTP experience much more seamlessly and efficiently than any other solution that exists in the market.
Another opportunity is to be able to move payments beyond transactions by offering credit options to customers early in the purchase journey, which helps increase customer appetite and increases sales for the merchants. Financial affordability is going to be a growth driver, and we will focus on making credit more accessible, working with industry partners.
3. What changes in terms of Merchants are you witnessing lately? How merchants have derived value from key products like subscriptions (UPI Autopay), same-day settlements, payouts, payment links, etc.?
The onset of COVID and changes in consumer behaviour propelled businesses to digitize their payment solutions and business operations. To share an example, PayU onboarded over 1 lakh SMB merchants in just one quarter, last year.
In a hyper-competitive age, businesses need to build a robust customer base with customized and flexible payment plans. PayU’s Subscriptions feature allows merchants to set up subscription plans that best meet the needs of their customers. Businesses, both online and offline, can use subscriptions to increase their revenue and establish long-term relationships with their customers. PayU has also partnered with leading OTT, edu-tech and food-tech companies to roll-out UPI Autopay on subscriptions.UPI Autopay payments have picked up steam with merchants and consumers as they are intuitive, faster, and secure modes of recurrent payment.
A robust cash flow is vital for any business. With features like Same Day Settlement, Instant settlement, On-demand settlement, merchants can receive settlements quickly in their bank accounts, which would help boost liquidity.
Payment links help merchants to share invoices with customers easily via WhatsApp, Facebook, Email or SMS, with money getting deposited directly in bank account. PayU has witnessed 2X growth in GMV and 4X growth in transactions through payment links year on year (between July 2020 to July 2021).
Payouts is an easy and automated way to disburse bulk payments to any account instantly and helps manage businesses augment financial operations. With Payouts, PayU had revolutionized how businesses can initiate refunds, quickly and easily even for their COD orders. PayU witnessed a 2X increase in GMV on its payouts platform in the past 6 months, and there has been a 7.5X increase in the number of merchants onboarded between January and July 2021.
4. How are you ensuring innovation in terms of product? What new innovations have you deployed?
Collaboration is one of the key elements of innovation. We engage deeply with all ecosystem players to understand their needs, pain points and figure out how to co-create solutions to address these problems. As a leader in the digital payments industry, we would like to be the strategic partners for all of the ecosystem players; be it merchants, banks, lenders, payment networks or regulatory bodies.
For example, when it comes to understanding the needs of our merchants, deep strategic discussions with them via an initiative called “Merchant council”, helped us perfect our products and offer innovative solutions to the merchants. We also believe in a research driven approach when it comes to new product exploration. Our in-house user research team has conducted many focus group studies, contextual interviews surveys to sharpen our product strategy.
While our business model is geared toward merchants, many of our products, particularly those that power the experience of doing a payment transaction, are used by retail customers. As a result, PayU’s product innovation always has a “customer-first” approach at its heart. We observe the frictions and difficulties that consumers face during their payment journey and start by solving those pain points. Whether it’s access to credit at the right time, transaction failure at the time of checkout, lag in refunds and settlement, we work to build solutions to bridge these needs. Our innovation mantra is to create sustainable products that not only meet business needs but add value on a larger scale and increase business efficiency.
This philosophy helps us continuously innovate. One of the key innovations that we have achieved at PayU is the Recommendation Engine. Using Machine Learning algorithms, the engine recommends the best “contextual” payment instrument to the user, resulting in a minimum 5% improvement in successful transactions (SRT).
There have been innovations for UPI-based payments as well. In partnership with PSPs, we offer phone number-based flows for UPI. This helps in removing friction from the payment process as users don’t have to remember the Virtual Payment Address (VPA). Similarly on refunds leg, we have made it simpler for merchants to process refunds on UPI without asking the users to enter too many additional details.
5. What are your focus areas for 2021?
We are actively focusing on four critical pillars to support merchants’ diverse business and digital payment needs.
Firstly, we will be focusing on merchant experience, and aim to become the partner of choice for all merchant segments by providing comprehensive product solutions, seamless onboarding, data insights, automated control, optimal merchant management services, intuitive dashboard& analytics and best-in-class merchant care systems.
Affordability at point of sale is a key focus area for us as PayU aims to become the best-aggregated platform offering the highest coverage of affordability options with targeted offers and promotions to stimulate consumer spending, increase ticket size and sales for merchants.
Subscriptions is the third focus area and we are enhancing platform capabilities with multiple banks integrations. We intend to create an intuitive and smooth merchant & customer experience with products like UPI Autopay.
Lastly, PayU will focus on providing merchants with a frictionless payments experience by identifying and eliminating pain points. Together with Wibmo, PayU offers a robust digital payment ecosystem capable of harmonizing transaction processing on both issuing and acquiring sides, and delivers a seamless payment experience and industry-leading success rates in online and mobile payments. It also gives us unique opportunities to create end to end product experience like ‘Express Pay’ which reduces hops and redirection from the payment flow.