The launch of Reliance Jio Infocomm’s point of sale (PoS) terminal is set to intensify competition among payment companies seeking to win over the Kirana store, a key battleground in the digital economy wars. The PoS machine — or card swipe terminal — is integral to Reliance Jio Infocomm’s plan to create an ecosystem around small merchants. Rivals Paytm, PhonePe and GooglePay are stepping up their game with the aim of creating a web of services — payments, supply chain, and working capital financing — by integrating these functions around the terminal.
The transformation of the Kirana from a cash-based neighborhood store to a digitized shop has taken center stage for digital payment companies. QR (quick response) codes were thought to be an apt solution for smaller merchants but haven’t really worked — more was needed. “The Indian retail industry is about $710 billion, of which 90% is unorganized, dominated by 15 million Kirana stores,” according to a recent note circulated by SBICap Securities, the brokerage arm of the SBI Group. “Currently,15% of this 15 million can afford the PoS terminal and its technology. The PoS market is significantly fragmented with only 2-3 large players and hundreds of small regional players. Further, there are various market opportunities to create an ecosystem around the PoS terminal by vertical as well as horizontal integration.”
ET spoke to multiple industry insiders to piece together how space is expected to evolve with the entry of the Mumbai-based conglomerate. Reliance didn’t respond to queries. The company has two products — the Jio PoS terminal and MyJio app — that have been distributed to shop owners. “Jio already has a ready customer base of around 300 million subscribers to its telecom network,” said one of the persons cited above. “With offers and promotions through the MyJio app, they can attract these customers to these stores, which is the plan.”
It’s not just targeting consumers but the supply side as well. Merchants need to order goods from wholesale centers to sell to consumers and there is a vast opportunity in digitizing that business. Wholesale arm Reliance Market will be leveraged for this purpose, allowing merchants to use the same terminal to order supplies as well.
While Reliance is building an independent ecosystem, others like MSwipe want to keep their platform open. “The critical difference for us is we are doing it as an open platform allowing any apps to operate and giving freedom to the merchant to buy from any wholesaler,” said Manish Patel, founder of Mswipe, which acquires merchants for card payments. Traditional PoS companies like Innoviti, Pine Labs and MSwipe are also looking to build products to exploit the opportunity.