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How Sodexo is going digital in India


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Last month, the Reserve Bank of India (RBI) released draft guidelines for meal vouchers which said that they cannot be issued in paper form anymore and will have to move to digital means. Sodexo, one of India’s largest vouchers companies, had already begun digitizing its operations over 14 months ago by issuing a pre-paid card. However, unlike most pre-paid cards which allow purchasing of a wide range of product and services, Sodexo has chosen to limit usage of the card to only food and non-alcoholic beverages, and running its own proprietary acceptance network. “The moment that happens, it becomes a safety net for us,” Suvodeep Das, Vice President for Marketing at Sodexo told MediaNama in an interview. Excerpts from the interview:

Why a proprietary system?

Sodexo has two solutions in India: meals benefits solutions and employee benefits solutions, with around 10,000 clients for employee benefits solutions.

“So for meal benefits, we had the meal vouchers, and since the last 14 months, we have launched the meal card. Before we launched this card, we set up our own proprietary acceptance network. So we went ahead with 30,000 terminals across the country – across 700 cities in India – to make sure that this card can be used only for meal benefit.

Interestingly, we don’t go through the MasterCard and Visa networks. Everybody else does, but we don’t do it. So that ensures full compliance. We have a one-on-one relationship with every merchant. So we have a client contract with every merchant which clearly states that the merchant is legally obliged to accept this card only for food and non-alcoholic beverages. The moment that happens, it becomes a safety net for us.

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The meal benefit is a tax exemption which means that we have to be compliant. If we have a proprietary network, you know the terminal will be placed only in food outlets or non-alcoholic beverage outlets. We wanted to be 100% compliant.”

“What have done is we have replicated our entire meal voucher network digitally. Now we are in the process of expanding to tier 3 and tier 4 towns and cities. What we’re very proud of is that, since we have deployed 30,000 terminals, as part out of proprietary network, around 7,000 merchants, Sodexo was the first means of digital acceptance. So they had never accepted a credit card or debit card. So we had to train and them and show that this is how the machine looks like, this is how you swipe, enter a PIN, print out a charge slip and so on.”

Conversion to digital from meal voucher system

“We have millions of consumers. Every month, we used to produce millions of coupon booklets. They used to be shipped to all our client’s offices. Then they would be distributed to the users. And the users would take the booklet. We are present in across 1500 cities. So it’s humungous.

They would take the vouchers to the outlet. We have a reverse logistics system. We operate with some of the biggest courier companies in the country. And we have security on the route because this is very precious and somebody can take out some from the envelope. So the courier company would go there and pick up the secure envelope get it to our back-end processing centre in Malad. Then there would be someone who would put it through the counting machine. Someone would verify and eventually, they would transfer the amount to the merchant’s account.

So now the process is the company would issue a card which will be sent to the office. Where the HR would distribute it. The card would be personalized. But we’ve also added a lot of security features. When you get the card, you get an activation code. You have to go to the portal and enter the card number and activation code. You also get a separate PIN. Once you’ve activated it, when the HR asks to load the amount on the card, we load the amount. And month after month, the HR needs to go to an online portal and enter the number of employees and add around say, Rs 2,200 per month.”

Number of outlets

Sodexo is not accepted at 100,000 outlets, “but people like you and me don’t go to 100,000 outlets. We go to 20-30 outlets where we frequent and those are the places we are looking at,” Das says. “In fact what we also do, with each of our clients we have something known as ‘make a wish’ campaign so we go to the employees and we ask them ‘which are the outlets where you would like to go and use the card?’ And then we go and enroll them.”

“So we have around 6,000 restaurants as of now. And the total number of outlets is 15,000 which includes shops. And we are growing and we are adding more every month.”

Split between digital and voucher and challenges in going digital 

While we are not allowed to disclose our percentage split, we started our digital journey 14 months back,” says Das. “A lot of our clients said that they would change to digital at the end of the fiscal year. And now the second wave of clients adopting the solutions will start. So we are on track to migrate as many clients as required to the digital solution the next couple of months. The back end system also needs to be ready because we are a global company and globally more than 60-70%, of our business, is digital. We’ve invested for the last three years in building these systems. And it is the most important part of any acceptance infrastructure, which we have painstakingly built, for so many years. So the issue of giving cards is far easier than setting up the acceptance infrastructure across so many cities.”

Cost of terminals

“So mostly, it would be a variable cost and it is a rental model,” says Das. “It’s not a CAPEX (capital expenditure) based model. It depends of per transaction. But we work with multiple acquirers and there are different rental models. So you pay a fixed rental and a variable per transaction cost. But importantly, we both acquire and settle the transactions so that’s what makes it a unique system again. We have full control over the network.”

Restaurant onboarding and fees 

“One is that we look at the relevance of a restaurant. We would look at where it would be located. We also do physical checks of the restaurant. If it is clean and hygienic and has a certain amount of reputation among people in that area. We look for the proof of address and proof of identity of the owner and last we take their bank account details to remit to their bank accounts.

In Navi Mumbai, we got some request from their employees saying that they frequent a couple of outlets which were not on our network. So it took us about two weeks to do the paperwork and install the machine etc.

We charge a very small marketing fee to the merchant. That’s only on the Sodexo part of the transaction. Non-Sodexo part of the transaction, they anyway make the entire amount of money. The fee for the merchant varies from different categories.The volume of transactions from the merchant determines the fee we charge.”

Mobile app

“We have an Android app, but the iPhone app should be ready in the coming days. It’s called Sodexo World. The three most important features are, firstly, a mobile payment option where you can link a meal card to the app and you can scan a QR code and make a payment. Secondly, there is a global outlet locator. Wherever you are, you press the button, it will tell you how far it is and gives you directions to go there.

Thirdly, because we are such a large company, we get a lot of deals and discounts from merchants. We have around 2.5 million daily users and obviously, all our merchants want a piece of this pie.

The app was launched in June 2016. And the mobile payment solution was launched in January this year.

For mobile payments, we have made it simple for any user. In any transaction, you need to know who you are paying so the QR code, it is a merchant identifier. Or you can also type the name of the merchant, or you could type the mobile number of the owner. The user enters the amount. Once it is done, it checks in the server if there is balance in the card. Then you enter a PIN – our cards are PIN-based. It is an added layer of security we have put. Once the transaction is completed, you get a confirmation and the merchant gets a text message. The transaction takes less than 10 seconds.”

Online expansion

“What we’re doing is integrating with a couple of payment gateways to enable online acceptance at checkout. So when you go and order on a food portal, you’ll be able to pay for them. Some companies offer card on delivery, so they already carry the POS terminal. So you order a pizza, the delivery person swipes the Sodexo card. On delivery payments are far greater than online payments.  In a couple of weeks, you’ll be able to pay online on most prominent food sites. We are in the process of integration.”

Gift voucher solutions

“We also have a very big gift voucher solution. And some of the biggest merchants accept the Sodexo gift voucher. A lot of companies give, for example, our company itself during Diwali gets an X amount of vouchers as Diwali gift. A lot of companies give gift vouchers instead of cash as incentives. Some companies give it to their dealers and distributors as well. They can then use that money in the true spirit of gifting rather than cash. We have about 11,000 outlets who have signed on our gift voucher network. And we are launching a gift card as well very soon.

This will also have a separate acceptance network as well. But there will be some overlaps with the meal voucher solution. We have a back end processor which identifies that this is a Sodexo transaction and processes it.

The stores who come on our network comes from the clients itself and they identify which shops they would like to be part of our network. So we know the pulse of our client and the kind of outlets they want.

The big difference between something like an Amazon gift card is that we are very inclusive. In the sense, the Sodexo gift card can be used across multiple stores. A lot of these single brand cards are very restrictive and you can use it only at a single portal or just one store.Ours is a multi brand multistore card. The freedom of choice is much bigger.

Rewards programme

Say Reward is a back-end loyalty management system that we run. It’s not a core part of our business. The core part of the business is still employee benefits incentives recognition. The core part of the business meal benefits, gifting solution. We run Say Rewards we run it for a few companies where they are trade partners or consumers can log on to a white-label platform they’ve put and key in their loyalty points and we’ve tied up with merchants to redeem those points.

So for example, in our company, we have an intranet and we get points for various behaviours. On completing some tasks, employees get points. If you fill in two surveys, you get 10 points. These points will get accumulated and at the end of the year, you’ve accumulated 100 points, for which you can get something like a travel bag or a meal for tow, you enter your id and password and you pick up the code and redeem that.”

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  • Rahul M

    These digitized Sodexo meal cards are rarely accepted as many merchants do not have those special machines and sometimes it is not in working condition. My company switched back to coupons after horrible 5 months experience with the Meal card. Most of the balance is still unused.

  • sketharaman

    Yet another story that regurgitates whatever a company says.

    “While we are not allowed to disclose our percentage split, we started our digital journey 14 months back”. Total BS. My then employer deployed prepaid meal cards and POS terminals in 2008. They never worked. They were pulled out and we went back to paper vouchers in 3 months.

    “So we had to train and them and show that this is how the machine looks like, this is how you swipe, enter a PIN, print out a charge slip and so on.” Highly patronizing statement. As though everybody else in the world was living beneath the rocks until this company came along and taught them the facts of life.