Soon-to-be Payments Bank Paytm now allows payments at retail chains like Spencer’s Retail, Heritage Fresh, More, WH Smith, Kendriya Bhandar, V2 Retail, Value Plus and Pai International (Pai Mobile). This follows its tie-up with quick-service-restaurants such as KFC, Pizza Hut, Cafe Coffee Day, Costa Cofee, Barista, Vaango, among others. Paytm claims to have 125 million wallets. We’ve written to Paytm for answers to the following questions, and will update when we hear more:

1. How many of Paytm’s 125 million wallets were active in June 2016 (or the latest available data)
2. What percentage of wallet transactions during that period were not related to either Recharge or Uber?
3. What percentage of Paytm’s transactions are taking place outside of its owned or invested services. Invested services would include Jugnoo.
4. How many transactions during that period took place at the QSR segment (KFC, Pizza Hut, Cafe Coffee Day, Costa Cofee, Barista, Vaango), and what was the amount transacted?
5. What percentage of Paytm wallets have bank KYC completed?

Why are these questions relevant? What Paytm is trying to do here is create a virtuous cycle to change user and merchant behavior: they connect wallets to merchants, and to be relevant, they need wallets to be active, and for merchants to get money from those wallets. If there aren’t enough wallets then merchants won’t be interested, and if there aren’t enough merchants, then wallets won’t be active.

Paytm addressed one part of this equation by aggressively building out its wallet base: it offered users incentives in terms of cash-backs to fill wallets with money, hoping that they would use them, and the ease and convenience that the application provided would get them to use wallets again and again. At the same time, their primary hook for using the wallet is their main-stay recharge business, which fulfills a basic need of mobile connectivity.

However, while Paytm can take the 125 million wallet pitch to a merchant, what really matters to the merchant is the volume of transactions, and perhaps the commission and the payment-release cycle. There are more Paytm wallets in India than there are credit cards, but how many are being used, and how many are being used offline?

To shift people from cash to cashless is not going to be easy, and we’re not sure if the pitch that “This will ensure that now you no longer will need to fish for small change during your weekly shopping trips” quite cuts it. Paytm is trying to do that with “a wide range of promotional offers and schemes”, but that’s not really a sustainable approach, even it if is important to kick-start usage.