Paytm, India’s widely-used online payment system, has announced to make some alterations in its cashback strategy in order to focus on offline merchant payments at retail kirana stores, rather than giving it for peer-2-peer UPI payments.
The company is looking to develop the buying behavior of customers by using Paytm at offline stores through a change of strategy. However, the development comes at a time when the digital payment giant is looking to venture into Tier IV and V cities to activate its next phase of growth.
“Paytm will be investing money in offline merchant expansion instead of driving incentive-led P2P transactions. Our offline merchants create high-frequency usage and an important use case for Paytm consumers. By investing in real merchant payments even in the remotest part of our country, we will help expand the vision of Digital India to the grassroots,” Deepak Abbot, senior vice president at Paytm said.
Based out of Noida, Paytm was founded in 2010 by Vijay Shekhar Sharma with an aim to bring an ease in the digital payments ecosystem across India.
The company said UPI P2P payments, often done by users to gain some extra money, gamify the system and can be detrimental to a cashless economy.
The UPI users on Paytm have been using a host of Paytm services for long and don’t need cashbacks to make payments, the company added.
Just last week, Paytm said it would invest Rs 250 crore for the expansion of Paytm QR in Tier IV and V towns this year.
The company expects to reach more than 20 million merchants across India by the end of this fiscal with this investment. The company at present claims to have more than 1.2 crore (12 million) merchants across the country that already accept payments through Paytm QR.
Addition on, Paytm will invest further in lending and insurance, rather than on P2P payments to help merchants get better access to capital and provide more financial security.