Beam is a mobile payments platform that intends to extend the reach of the prepaid mobile wallet by offering what it claims a simple consumer facing product. The company’s CMD, Anand Shrivastav informs that it is planning a big relaunch and also intends to venture into virtual goods payments. Excerpts from an interview with Shrivastav:
MediaNama: What has been Beam’s approach to the prepaid payments market?
Shrivastav: We were ab-initio pretty clear that even though Beam is a financial product, our approach has always been to treat it as a consumer product.
MediaNama: But how’s it different from other prepaid players such as ITZ cash?
Shrivastav: They are a predominantly whole-sale aggregator model with agents that they appoint for transacting on behalf of the customer. In contrast, Beam is a consumer facing product. Prepaid cards are retailed to the end customer who transacts, who loads the instrument directly on his mobile and does all the transactions. There’s direct interaction with the brand all the time. At the same time we have franchisee brand shops and individuals, who offer assistance. Last but not the least we actively acquire not only merchants which provide online services but we also have built a huge ecosystem of more than 20,000 offline merchants: mom and pop stores, grocery and medical stores, food joints etc, where our customers can access and pay remotely.
MediaNama: How do you acquire customers? Tell us about Beam’s customer acquisition strategy. How do you inspire confidence in the payments business?
Shrivastav: To a new market we are an unknown sector and an unknown brand. And here we are talking about somebody to part away with his money and convert it to digital (currency). We are fashioned like an FMCG company, so we acquire distributors who inturn service approximately 240-400 points of sale, which includes retailers, merchants who accept Beam as a payment and franchisees who sell cards and assist new customers. We then do promotions such as roadshows in neighbourhood areas and the objective is to demonstrate the concept and the simplicity of the product. There are interesting games which we have designed to demonstrate the product. We also incentivise (new customers) to refer their friends and family members.
MediaNama: What is the value that you deliver to the customer?
Shrivastav: One Beam account fixes all his needs. You’re walking into a Beam promotion, you like it and load Rs 1000 into your Beam account. You SMS your details (name, gender etc) and get a message with your account number and 6 digit pin. We’re connected with almost all telecom operators, we’ll pull the recharge and you’ll also get an SMS from Beam informing about the balance amount. It’s the same for DTH recharges etc. You can pay your nearby grocery store(registered with Beam) by just messaging his mobile number and the account.
MediaNama: What about the (Reserve Bank of India’s) Know Your Customer rules?
Shrivastav: It’s only for certain types of transactions but there are no specific requirements for utility bill payments and telecom recharges.
MediaNama: How do you deal with issues related to incorrect numbers, payment disputes, goods not being delivered?
Shrivastav: Every participant is pre-registered. If the number which is not registered is sent a payment, the transaction fails. If the customer says that he’s not initiated the transaction we have a transaction ID system which uses a sophisticated algorithm. Every time you initiate a credit or debit transaction, a unique TID number is generated and is also mapped to your mobile number. We also have trace records for mobile numbers. For the last three years we’ve not even had one case.
We have a tight service arrangement with all our merchants, just like Visa or Mastercard have. If the customer repudiates the transaction or there’s an issue with the product, we can’t intervene in delivery but we put out a call to the merchant telling him to either reverse the charge or resolve the query in seven days time. It’s been very rare with just 1 or 2 cases this year. It’s in the merchant’s interest to not annoy customers.
MediaNama: How many monthly transactions take place on Beam in a month? How many regions have you covered?
Shrivastav: Close to about a million transactions on an average. We have around 20,000 merchants, 10,000 plus franchisees, 50,000 plus retailers and 7 million customers. We’re spread across 8 metros and 5 other states including UP, Punjab, Haryana, Rajasthan, Madhya Pradesh, Chhattisgargh and now also towards other parts of Maharashtra. In fact 15%-20% of sale comes from areas where we don’t have distribution or sales persons. We have franchisees in remote areas such as Kohima in Nagaland.
Out of 661 distrcits India we have reach in 385 and by end of this financial year we should have reached about 600 of these districts.
MediaNama: And how are you financing this growth?
Shrivastav: We are a widely held company, we have overseas investors. We have private equity funding. Doon Foundation, and GGV from US are some of our major investors.
MediaNama: Are you also doing IRCTC ticketing? What is the percentage of IRCTC transactions compared with overall transactions?
Shrivastav: Yes, we are directly connected with IRCTC. I would say around 10%.
MediaNama: Isn’t it much lower than market standard?
Shrivastav: We are not a travel or lottery aggregator, we are a payment infrastructure company. Our top 5 revenue verticals are : telecom & TV recharge, Utility Payments, Remote shopping payments, travel split between air & rail and cinema & entertainment.
MediaNama: What’s your take on Airtel Money?
Shrivastav: To be fair it’s a respected brand. We would be differentiated in many ways because we are agnostic or neutral to which telecom my customer is (signed up with). We are an open system any telecom operator(‘s customer) with or without bank account can become my customer. On Airtel, only an Airtel subscriber can join, it makes you change your SIM and the other party you transact with has to be an Airtel merchant as well. In our case there is no need for a SIM change, no software, no USSD and we don’t care which operator you’re with.
MediaNama: And what about IMPS?
Shrivastav: IMPS currently is only meant for banks. If we were to compare what happened in mobile banking in the month of August, total transactions were just about 10,000 we had close to 600,000 transactions. They transacted a gross amount of Rs 10 million while we transacted Rs 80 million. We will surely like to join if they open it up. But there’s a lot of technology over-hang with MMIDs etc which is not that customer friendly, in my opinion.
MediaNama: You’re still not covered by RBI’s one time password (OTP). Any plans to move towards that?
Shrivastav: OTP is a good thing. For credit card there’s a pre-set limit, in our case our target is people who do not and cannot load more than a 1000 rupees. An average customer does 780 rupees a month. A good way to kill it would be to have these technical impediments. It’s not the smartest way to address the problem.
MediaNama: What would be the smartest way then?
Shrivastav: We transact on Amazon without OTPs. To make merchants who accept financial data move to world-class security regimes in terms of protection of customer data rather than put things in front of the customer to make the whole thing unworkable.
MediaNama: Have you considered entering into the Virtual goods segments? You already have a base of users? Or is that not your base
Shrivastav: It’s just around the corner.
MediaNama: What about mobile VAS? Ringtones, wallpaper downloads etc?
Shrivastav: We have understood, re-calliberated and have prepared ourselves to get a big national launch and we’ll invite you to experience it. It just needs few weeks of understanding and tweaking which is going on.
MediaNama: We have come across comments that prepaid players earn out of residual amount in wallets which gets forfeited. How true is that?
Shrivastav: You can leave zero balance in your account and use it to the fullest. We give you the options but we respect that it’s your money and we let you do what you want to.
MediaNama: So how do you make money?
Shrivastav: Our revenue model is quite like Visa or Mastercard. We have a merchant discount rate which ranges from 3% to 15% or 17% depending upon the product and service and because of the value that we give to the merchant they are happy to partner, we’re rather a part of their marketing cost. We bring customers to them.
MediaNama: How do you market to the customer?
Shrivastav: We market at mainly four levels: local promotions and advertising, practical promotions on festivals, digital advertising and promotion, mass level TV campaigns. For the customer the USP is convenience , for the merchant it is supplementary income from new customers. Before we launch we already tell them how many customers we have in a particular postal code.
MediaNama: But then how do you do direct marketing for the merchant?
Shrivastav: When a merchant gives a good deal we not only list him on the website but send targeted SMS to customers who like to receive promotions.
MediaNama: How have you been affected by the TRAI’s DND guidelines?
Shrivastav: We are classified as a transactional SMS by all operators, so we don’t face a problem.
MediaNama: Do you look beyond SMS as a bearer?
Shrivastav: We are present in many different avatars on digital: mobile phone for SMS, through an IVR call, through a mobile website and a mobile app.
MediaNama: What sort of data are you actually tracking and how is it impacting your business decisions?
Shrivastav: That is one reason we have been so successful. We most definitely know what our customers are doing, which days of the month are likely to drive which type of shopping, goods, what time of the day, their age profile, demographic profile, social profile we have all that data. Now when we’re going for a pan-india launch we have understood the data and trends from the past approximately 6 months of our study. We need to study the customer because we’re driven by his need.
MediaNama: Can you elaborate a little on the seasonal element?
Shrivastav: Just to give you an example, the first and the fourth week of the month are high on shopping transactions, while the third week doesn’t register many shopping transactions.