The Shift from Stickers to Sound: Paytm vs PhonePe

Yesterday, when I was paying for a coke at Sector 54 Chowk, Gurgaon. It surprised me to see PhonePe's Smart Speaker perfectly placed parallel to Paytm's Soundbox.?

The tussle between the wallet & UPI giants isn’t new. As of March 31, 2022, PhonePe had 32 million merchant partners compared to Paytm's 26.7 million.? Earlier this week PhonePe filed a complaint of mass burning of QR codes by Paytm’s staff. This seems like a fight between sales teams to tarnish each other's reputation and business.?

Thus, PhonePe has forayed into the space of Sound Speakers with its Smart Speaker. This is mainly due to the immense success of Paytm’s Soundbox & Soundbox 2.0 which have disrupted the market. As these wallets do not charge both the parties that are customers and merchants for using their QR code, this small box is a huge opportunity. Hence, PhonePe wants to be part of that pie.

To begin with, let's examine the factors that have contributed to the growth of Paytm's Soundbox.?

1. Announcement of payments: This helps merchants to keep track of multiple payments through voice as checking phones becomes difficult every time. Also, in India, the small Kirana stores are usually run by 2-3 people. Thus, the soundbox becomes more convenient for each of them.?
2. Reduction in fake transactions: This reduces the fake screenshots and transactions as the merchants used to get duped earlier. They can directly check the details in their records as well.?
3. Tech–friendly: The soundbox is tech-friendly and connects with an e-sim. It does not require Wi-Fi. Also, there is flexibility in the number of languages as well. (Available in 11 languages as of now – Hindi, English, Kannada, Tamil, Telugu, Marathi, Malayalam, Bengali, Gujrati, Punjabi & Odia)

The innovation has helped Paytm win over three million merchants to subscribe to the product. In addition to this, it has generated more than INR 400 crore in additional revenue for the company (estimated by Macquarie, a research firm).

Let’s compare the marketing mix of Soundbox 2.0 & PhonePe’s Smart Speaker?

Walmart-backed PhonePe has adopted a penetrative pricing approach to onboard more merchants using its Smart Speaker. But competing with the first mover will always pose a challenge in terms of quick innovation and existing merchant base. Because no merchant would want to pay two players (at least Rs. 300 monthly) their hard-earned money so easily. These sound speakers are not just QR codes which will get pasted easily, they will come at a cost.?

With a funding crunch across the country, the UPI giants are looking for more opportunities to earn revenue and march towards profitability. However, the competition is heating and will continue to rise from the merchant side as UPI adoption increases countrywide.

What are your views on Soundbox & Smart Speaker? Who will emerge as the market leader??

#Fintech #Paytm #PhonePe #Innovation