Can Fintech really impact mainstream Banks?

It was 09:00 p.m on a typical chaotic day in Bangalore. On my way back home, I wanted to fill fuel in my car. I was pleasantly surprised  looking at a poster at  HPCL petrol bunk, Sarjapura Road. The poster says that they accept Paytm for fuel. I have given it a shot. It was good experience. All you need to do is to just fire up your paytm wallet, there is a small icon near send money. You need to point at it and you have paid for your fuel.

The petrol bunk guy suggested that I was the first person to try this and he was as excited as I was. This experience has changed perspective of both of us on paying for fuel. Well, looking forward to see how these payment banks are going to reduce the cash usage in our day to day lives.

If anyone is wondering can payment banks really make a dent to main stream banks, here are the stats:

• An acquiring bank( Bank that provides POS machine) , on an average, makes 30p per 100. With the new technology, this is being taken away by paytm. Does 30Paise really matter?
• Assume that an average revenue at a petrol bunk per day is 1000 customers X 100 Rs (average spend) = 100000
• Assume that 25% of them pay by card, 25000 card transaction happen through POS machine. This gives acquiring bank, approximately 75Rs per day per petrol bunk.
• Extrapolating this 75Rs per day X 30days X 12 months = 27,000 per bunk.
• Assuming that there are 10,000 bunks all over India for HDFC, loss of revenue for one service turns to be 27Cr.

So, 30p does matter. Its time to buckle up. My hypothesis is that Fintech companies are going to reduce gross revenue of mainstream banks by at least 1%-5%.