HDFC’s masterplan to kill Phonepe, Paytm

It’s 2013, It’s a lazy Sunday afternoon and you have just woken up to realise that you are out of groceries. You have bread and jam for breakfast and then you drag yourself to grocery shopping. After half an hour of waiting and hustle, you finally get an auto. The auto wala, drops you off to the location, your total fare is Rs. 152, you juggle with the money while looking for notes and one rupee coin. You pay him Rs. 160 and tell him to keep the change since you were short of one rupee coin.

Then you shop for your groceries,as soon as you move to the billing counter you see there is a long queue of people waiting to bill their products. The cashiers at the counters are struggling to accept the money, giving out the change and bill the products. After 1 hour of wait, its finally your turn. The cashier asks you, if you want to pay through cash or card, you opt for card payment. After hours of shopping, you are starving now, so you go to a nearby Dosa stall to have dosa, but soon you realise you are out of cash, so you go to the nearby ATM to withdraw it. 

Okay, Did you just realize before demonetization, how banks and cash used to rule the payments in India? Today, they are nowhere, UPI apps and fintech have taken the front seat and are ruling the whole industry. Banks have now just become a place to park money. That’s it. 

You see, fintech companies are now trying to become banks, Paytm has Paytm Payments bank, Bharatpe is also setting up its bank, so slowly and steadily they are encroaching the turf of Banks, and they aren’t liking it.

Banks were in distress but one fine day, a start-up knocked on the door of India’s largest bank, HDFC, and claimed they have products through which banks can take on these companies.

HDFC was skeptical,

They pulled out their laptops and started a presentation. 

So, We all know UPI transactions have reached new peaks every year and they are just growing. Today be it a small chaat corner or a medical store, every merchant has a board filled with UPI stickers from different companies.

The seamless apps have made payments easier for consumers but they have made things difficult for merchants. 

Most merchants are bombarded with UPI stickers from different companies, but they have to stick it because most of the consumers use UPI.

But for merchants keeping a track of payments is altogether a headache, they have to track all payments on different apps. They have to juggle between apps to know which payment from where, and if payment failed, it was facilitated through which app.

But what if HDFC bank could give a customer a POS terminal, which accepts all payment methods including the UPI, further HDFC will also provide the merchant with software that keeps automatically keeps a track of all the payments received. 

So, the bank is the single point of contact for the merchant now. 

HDFC was amused. To the point that it took a stake of 5.2% in the company.

Here we are talking about Mintoak, a start-up founded by a former executive of Visa and NPCI.

It’s pitch was simple, we’ll make HDFC the single platform that offers everything to a merchant.

After all, they were right, Merchants have struggled to keep the QR codes of numerous companies and track payments. Learning the tech and software is really a task for them. 

PhonePe has about 25 million merchants, Paytm claims 21 million, and BharatPe claims another 15 million. But across the country, only 25-30 million merchants accept UPI
That means that all these companies have the same merchants.

But now Mintoak is telling all merchants that they can accept payments and keep a record of everything, even take loans through their terminal and app. How cool?

They have by far onboarded 6 lakh plus merchants, most of which are for HDFC bank. The behemoth bank now plans to place 20 million such terminals in the next three years.

But there is one problem in HDFCs big dream, it is well the fact that it is a bank at the end of the day. And banks are quite infamous for their scrappy interface. And that is the reason most people don’t even know they can make UPI payments through their banking apps.

For example, India’s largest banks ICICI and HDFC have a share of just 0.59% and 0.11% in the UPI transactions respectively.

These banks are technically challenged to the extent that, RBI recently banned it from issuing new credit cards. 

So, with their rusty technology and lethargic redressal system will they take on the fintech giants?