How we are making cashless mobile payments work

A prominent restaurant discovery firm just announced that they are shutting down their cashless mobile payments business. Ever since, a lot of sceptics have been quick to point fingers at other mobile payment products and question their viability.

Momoe has been focused on enabling mobile payments for real world such as restaurants, retail stores, salons and spas, urban toll roads and autos. We have been consistently expanding our merchant acceptance network and our app user base since we began in August 2014. We now stand at 2000 merchants and process 1000 payments a day with a 70% repeat rate. And we’ve managed to accomplish all this with a budget of less than a million dollars. Our belief is that the cashless mobile payments business is here to stay. Here’s why it works for us:

• We adapt to the user’s context to ensure we are part of the user flow: In restaurants, we enable split bills, which makes the user add his friends in the beginning of the meal. Then it’s a natural progression to show the live bill and enable them to checkout and pay at any time. Similarly, for over-the-counter payments at small stores, the user can enter the bill amount and proceed to pay. At toll roads, you can link your vehicle number to the preloaded wallet and payment automatically gets deducted as you drive through the toll.
• We are creating a habit of paying with the phone everywhere: We moved from an early adopter product to a mainstream app when we took the business decision to diversify beyond restaurants. Why? Because a user got serious about using Momoe only when she saw 7 out of 10 of her regularly frequented outlets near her work or home accepting Momoe payments. Just being in restaurants doesn’t cut it. Today, 50% of our merchants are not restaurants but grocery stores, apparel stores, pharmacies, salons and spas, and even the NICE toll road!
• We reduced the cost of onboarding and maintenance of a merchant to negligible levels: Instead of providing hardware like phones and iPads to our merchants, our product is built purely as a software layer that goes on to his existing phone or PC, and costs exactly zero to install. We also innovated around the merchant side product to make it simple to understand and train even the lowest wage staff. Currently our merchants adopt a “train the trainer” approach, where they get trained and then impart training to their staff.
• Customer acquisition cost have fallen since our existing customers are bringing others along: Once our existing users started believing in mobile payments, they started telling their family members, friends and colleagues about it. And they started using Momoe too. As we increase the incidence of payments by adding to our merchant network, users are finding more reasons to use Momoe. Our customer acquisition and retention costs have been on a continuous downward trend, even when we started scaling beyond early adopters.

Bottomline: Payments alone is a low margin business, so it makes financial sense only at a large scale. But adding value to merchants and consumers through local analytics and relevant marketing has a large upside which can be tapped with the power of mobile, and merchants can see ROI on their marketing efforts directly since payments closes the loop. We are on this journey, and it has been fascinating so far. While these are early days, you will soon see Bangalore as a cashless city, and we will expand to other cities as well!