Understanding the growth of Paytm post demonetisation

Street Vendor accepting payments via Paytm

We will look into and explain the growth of Paytm post-demonetisation using Roger’s five-factors focusing on product-based differences in gauging the rate of technology adoption.

Effect of demonetization on Paytm's growth
Effect of Demonetization on Paytm’s growth. Source: MediaNama

Why only Paytm was able to ride the bandwagon of demonetisation and grow enormously while other wallet players did not have the same impact?

I will take Everett Rogers’ help here. He published an awesome book explaining how new Ideas spread over time. According to Roger, the five product-based factors which largely govern the rate of adoption are:

  1. Relative advantage
  2. Compatibility
  3. Complexity
  4. Trialability
  5. Observability

Before looking at these factors in the context of Paytm, we have to note down two things. First, perception matters. Second, people think of any product/idea as innovative when it is perceived as new for those set of people.

Some background insights:

  1. Paytm was focused on being a client-side wallet. More on client-side wallets here.
  2. They were pushing the concept of QR-code based payment from the beginning.
  3. Paytm went on to hire around 7,000 salespeople to install these paper-based POS terminals having a little marginal cost as soon as they heard news about demonetisation.

Based on the above insights, let’s look at how we can explain Paytm’s success with the help of Roger’s 5 Factors

Roger’s Product-Based FactorsPaytmOthersVerdict for Paytm
Relative advantageClient-Side Wallet (larger penetration as it focused on QR Code POS from early on)Both client side and merchant side walletsPerceived as being better than the idea it supersedes
Compatibility1. Since they focused on QR codes early on, a lot of merchants were able to use these paper-based POS terminals.
2. Some of the Paytm’s campaign allowed them to cut out the QR Codes from newspapers and link it with their account to be able to accept the payments.
Compatibility similar to Paytm Perceived as consistent with the tools people had
Complexity Users just have to point the camera to QR Code to pay, this was as easy as it could get. Laggards in using QR code; focused initially on mobile numbers. If we look at the parties involved :
1. The receiver would have to tell the number to receive the funds, it’s not feasible for a shopkeeper to keep repeating
2. The buyer has to repeatedly type in the numbers at each merchants’ shop.
Perceived as relatively easy to use
Trialability 1. People were already familiar with Paytm from the days of top-ups and validity recharges.
2. They can also try it by sending small amounts of money as low as 1 Rupee.
Similar to PaytmPeople can experiment with it on a trial basis
Observability1. Lots of merchants have installed the QR Code on their shopfronts for easy payments which in itself validated the use case and acted as a promotion tool.
2. When people observed others paying via their mobile phones when they were struggling with cash, it acted as a push to go ahead and try this new method of payment.
Lower reach limited their observability as they didn’t have any physical evidence at the shop unlike Paytm’s paper-based POS terminalResults are visible to others

This was all about Paytm and Technology Adoption, if you have any queries or ideas please write in the comment box below.

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