In through the other door: Inside Paytm’s cashback offers for retailers

economictimes.indiatimes.com:

Paytm is back to offering cashbacks. This time, the money is being dangled before merchants, not consumers. And the strategy is proving to be quite a success, just as it did for consumer payments.

Paytm’s goal is to onboard as many merchants as possible and enable them to avail and offer credit in the coming months. The hook: attractive pricing of payment terminals and transaction charges, with cashbacks as the icing on the cake, people aware of the development said. The company has structured these cashback schemes in such a way that merchants encourage consumers to convert their purchases into ‘buy now, pay later’ option, or easy EMI schemes.

This way, Paytm gets to push consumer loans, too, the sources said. “The idea is to use attractive cashbacks to build a relationship with merchants and eventually offer them business loans and also get their customers to start using Paytm Postpaid,” said a top executive at a fintech company who requested not to be identified. This strategy sits well with Paytm’s broader goal to become a major player in the offline payments space and use the channel to acquire customers for credit.Also read | PhonePe sets foot in Point-of-sale device market to raise heat on rival Paytm Paytm has around 92 million monthly transacting users and claims to have around 8 million merchants using its payment solutions.

It intends to own both these channels of the merchant payment ecosystem, people cited above said. After that, it can offer these merchants credit, cross-sell other financial services, and make enough revenue from core payments to shore up its top line, they added. In a sense, offline is the only avenue open to the company at the moment for new business as the Reserve Bank of India has