Why Paytm, not middle India, is happy about cash crisis

The prime minister's announcement on phasing out Rs 500 and Rs 1000 notes has seen a panicked reaction among most citizens, many of who may wrongly feel their currency is now worthless. While the RBI has issued four advisories over the last three days clarifying some of these concerns, several online wallets and service providers appear to have simply played up people's misery without offering any real solutions.

Take the case of Paytm that went with the slogan "Ab ATM nahi, Paytm Karo" and featured full page Ads on daily newspapers for two days, with the Prime Minister's photo no less. Whether they took the necessary permissions and endorsement from the PMO before indulging in this act can make for a separate story. But expecting people to enmasse switch to wallets in lieu of conventional banking is plain wishful thinking.

For starters, who do I "Paytm Karo" to? More than my ability to put money in a wallet, what will determine Paytm adoption is whether my service provider also has a wallet to facilitate the exchange. My domestic help, baby sitter, milkman, vegetable vendor, car cleaner, office cafeteria food provider, or autodriver don't have any wallet accounts. Wouldn't it be simpler if I deferred paying them for a few days when faced with this situation?

My neighbourhood dry cleaner appears to have thought more practically. He sent a message to all customers asking us to defer cash payments till we had new currency or simply issue a check if we were comfortable with that. I don't think he would like to jump on to the bandwagon and "Paytm account kholo" (open Paytm account) yet.

My elderly neighbour received a message saying you can shop for groceries on Amazon and pay for it online, even if you don't have cash. I suspect this lady has never purchased anything from Amazon as her children tend to send her items via the platform. Upon visiting the Amazon site she struggled to navigate and realised they didn't have most of the brands she purchased. When she did get some items, she didn't realise online banking required a password. She didn't have a debit or credit card. To shop online, she would need to go to her bank and authorise online banking and/or get a debit/credit card. The net result: Amazon's promotional message didn't work for her.

Expecting non-adopters to adopt to any technology based financial transactions takes time and a lot of effort. I know of it firsthand. In the last two years I have tried to convince my parents - both of them retired bank employees no less - to switch to online transactions for ease and better access to their accounts. They have steadfastly declined. Transaction safety is their biggest concern and recent incidents of large scale data hacks and ATM fraud only further the fear of online banking. Poor telephone networks and low end mobile phones also add to the misery of transacting online.

Periodic education on overcoming these aspects is the only way to get people to comfortably transact online. And it is precisely this area that has been overlooked by all wallet and e-ommerce companies in their bid to out-do each other's promotions. No organisation appears to have looked beyond coining a catchphrase to take advantage of the confusion people had post the currency phase out announcement.

Amazon or Flipkart did not have a dedicated page in anticipation of first time shoppers who would visit following their promotional message. In fact you have to scroll to the very bottom of the page to understand what these companies do, and what safety measures are available pertaining to transactions, deliveries and possible fraud.

Paytm, while encouraging people with wallets to use them, did not have an Ad or highlighted section on its web page encouraging vendors to sign up. I had to discover the page after spending some time on the site. If you aren't English speaking and technology savvy, you might need someone to explain how Paytm works.

Also, in the list of companies who have adopted Paytm, there is no small business mentioned. At a time when one is approaching small businesses for adoption, projecting the success of a similar-sized business (if possible from a nearby locality) will resonate better than showcasing a bevy of large-sized customers, for who Paytm is yet another channel for transaction.

(To draw a parallel, several years ago Microsoft used this strategy to promote the use of Microsoft Office tool in rural India. It focused on rural folk who after receiving basic skills training on use of these tools saw more work related opportunities that transformed their lives.)

After all, it is not uncommon to see fly by night operators taking money from less educated folks claiming to represent a large company only to defraud them. Scams involving fake websites defrauding people in the name of offering alternate payment channels are well known.

What might have worked for companies (in the long term too) is offline engagement. Say if there was a team of people visiting major business districts facilitating their account opening on wallet platforms. While Paytm claims they will do this soon, I have seen no advertising around this so far.

If e-ommerce companies want to look beyond the online banking elite (who are anyways transacting on their site), they need to have an offline presence - perhaps near main markets to actively hand out pamphlets and other communication to shoppers about why they are better than the local store. Perhaps, extending a credit option to customers preferring COD (cash on delivery) for about 10-15 days to tide over the currency phase out may have helped in the long term, than merely asking people to transact using the cash phase-out situation as an opportunity.

Commendably, this is what banks appear to be doing - gently nudging their customers to go online.I received no information from my bank for the last two days and this morning I got three messages - I could visit anytime to exchange cash for upto Rs 2,000 from the ATM or Rs 10,000 from the branch; the branch was working this Sunday so I could walk in when convenient; and upon request would deliver cash to my house, if I wanted.

I was also given my relationship manager's number for more details. The person called me up to ask if I needed any extra debit/credit cards and whether I faced challenges in operating my accounts online. In short, I was given workable options. Incidentally, the bank is also putting up a stall to educate unorganised sector workers on the benefits of opening an account and fast tracking applications.

While all major wallet and e-commerce providers have reported tremendous growth in sign-ups and transactions, one will have to wait and watch how long users continue to use these services once cash is back in the economy.

Will my domestic help move to accepting online payment of her salary? Will my mother now start paying electricity bills online? In the future perhaps. But not today just because Paytm or Amazon says so.