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On Monday, Paytm launched $12 'soundbox' that accepts card payments. During the same event Pine Labs also announced a similar device at "nearly one-third of the cost of a regular Point of Sale terminal. This is in keeping with the rivalry in the Paytm-dominated payment soundbox market, where Phonepe and BharatPe have already entered the fray. GooglePe and Jio Financials services are also anticipated to introduce comparable devices in the near future.
Why and how much of an opportunity these soundboxes present.
45 Million Payment Soundboxes can be Deployed in India
Payment soundboxes which accepts payments and also announce it to the merchant and customer removing the friction of payment validation are important for India’s millions of small merchants who are accepting digital payments.
At Datum we estimate this opportunity to be around 45 Million out of which around 11.4 million are already deployed by Paytm, PhonePe and BharatPe.
Language barriers are eliminated by these gadgets because they support English, Hindi, Tamil, Telugu, Kannada, Marathi, Malayalam, Bengali, Gujarati, Punjabi, and Odia.
Key Drivers of Payment Transactions
After the launch of the first payment sound box in 2020, Paytm deployed 8.5 million devices till August 2023. According to Paytm’s annual report, these devices processed 5 billion digital payment transactions in FY22 for Paytm and 13.3 billion transactions in FY23. This really highlights the impact that the Soundbox has had on the Indian payments landscape. Apart from driving the payment transactions the monthly subscription fees also adds to the topline of payment companies with Paytm’s Sound boxes accounting for 8% of Paytm’s Monthly revenue in Q1 FY24. The Soundbox alone has added Rs 600 crore to Paytm’s topline, and has emerged as a key merchant retention tool. In conclusion, the Soundbox contributes to increasing transactions, merchant retention, and additional revenue, making these markets very competitive in the months to come.
According to Paytm’s annual report, these devices processed 5 billion digital payment transactions in FY22 for Paytm and 13.3 billion transactions in FY23.
Paytm Dominates with 75% Market Share
Paytm has got the first move advantage in this category which shows in the dominant market share of 75% in this category. With the entry of PhonepPe, BharatPe, Pine Labs and the expected entry of Google Pay, Jio financial services and banks Paytm will face some competition but is expected to enjoy the market lead in coming quarters.
The Payment Soundbox is a purely Indian innovation to help small merchants accept payments without any friction and opened up a new revenue option for the payment providers. In addition, the Soundbox has also helped to improve the user experience of digital payments by providing merchants with confirmation messages and other helpful information. This has helped to build trust in digital payments, which is essential for their widespread adoption.
