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Will tie-ups with utility services boost digital payment apps in India?

Digital payment platforms in India have conceived a business model that is expected to spike their engagement with offline consumers by a large margin, according to market pundits. A recent trend has emerged where online payment platforms are signing partnerships with utility service providers in India in a bid to boost digital payment in India.

Vikrant Khorana, Senior Vice President – Business at PayUmoney supported the trend with his insights into the digital payment ecosystem in the country. He said, “Payments such as educations fee, insurance premium and utility-linked service such as electricity, water and gas, are mandatory for a consumer. But the traditional process of making these payments has certain limitation.”

In the absence of digital media, the consumer has to wait in a queue and make the payment either by cash or cheque but digital payment platforms in the country seek to revolutionise utility payment and make transactions hassle-free. FreeCharge and PayUmoney have emerged in the marketplace to realise this opportunity and engage offline consumer on online payments.

FreeCharge has rolled out an option for electricity bill payments on its platform with eight electricity boards in partnership covering major metro markets. In addition to payment options such as credit / debit card, netbanking or ATM / Cash card, the services will also send bill pay reminders helping consumers to avoid late payments. Going forward, FreeCharge has also expressed its interest in the exploring gas services in the utility payment segment.

“The concept of utility payments via mobile is still at a nascent stage in India. We foresee this market evolving rapidly with radical shift in customer behaviour towards m-commerce. Over the past five years, we have established a chain of more than 27 million loyal customers who use FreeCharge for their recharge and utility payments. We have recently launched electricity bill payment and have received a tremendous response from our customer base. We are confident that it’ll grow by leaps and bounds in the coming days,” said Kunal Shah, Co-Founder and Chief Executive Officer of FreeCharge.

Meanwhile, PayUmoney partnered with Tata Power Delhi Distribution. The digital payment platform launched its Pay & Win Scheme to encourage consumer to go cashless and opt for net banking.

“Besides being green initiatives, such initiatives also help in enhancing the consumer’s convenience as they can make payments anytime and from anywhere. The tie-up is also in line with the government’s and Reserve Bank of India’s endeavour to encourage cashless transactions,” said Praveer Sinha, CEO and Managing Director at TPDDL explaining the rationale behind the partnership.

PayUmoney seeks to promote convenient and seamless mobile transactions and has witnessed a 35 per cent hike in mobile payments in the utility space, quarterly. “There is a huge of list of utility merchants we work with across the country. We are working with Torrent in Ahmedabad, BSES in Rajasthan and Delhi, Reliance in Mumbai, and Mahanagar Gas Limited in Maharashtra, among others,” said Mr Khorana.

One of the largest opportunities for digital payment enabler is the untapped market in Tier II and Tier III cities but industry experts forecast a macro level development which will include growth of debit cards, credit cards, and mobile penetration which will subsequently increase digital transactions in the areas.