Bajaj Finance announced to foray into the hyper-competitive payment space in India with Bajaj Pay

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Bajaj Finance announced to launch Bajaj Pay which will allow users to pay via a digital wallet, or an EMI card, or credit card or UPI options, January 2021. The payment platform for consumers is likely to be launched in Q4’FY2021. The company is also planning to offer open-loop universal QR code infrastructure to enable contactless payment.

Additionally, the company intends to offer Bajaj Pay for merchants providing it access to 100,000+ merchants. This will enable Bajaj to record additional market share growth in the medium term from these merchants.

The company is also emphasizing on launching five marketplace platforms including EMI Store, Insurance Marketplace, Investment Marketplace, BF Health and broking app. Bajaj is additionally planning to partner with 25 apps which offer similar product/service to its customers. These apps will enable Bajaj to improve customer stickiness.

Apart from the above announcements, the company is also emphasizing on improving productivity by transforming its apps including Merchant, Sales One, Collections and Partner, for its employees, merchants and partners that could help it improve efficiency and business operations.

Apart from offering lending services, Bajaj Finance is focusing on marketplaces and a payment ecosystem to enhance its customer data collection, as a part of its strategy. This will further reinforce its credit underwriting capabilities allowing it to reach a larger customer base.

The payments landscape in India is highly competitive with presence of various large players including Google Pay which offers UPI services; Amazon Pay; Paytm which offers UPI and prepaid instruments; PhonePe wallet, UPI and other payment options; and banking platforms such as SBI’s YONO which offer various payment options.  Bajaj also competes with top banks and large fintech companies which are looking to offer 360-degree services to attract a wider customer base.

Digital payments in India have grown significantly especially due to COVID-19 restrictions. A large portion of digital payments via UPI is still peer-to-peer, however, peer-to-merchant payments have also grown in the recent quarters.

In particular, the total UPI transactions volume reached 2.3 billion in January 2021, amounting to INR 4.2 trillion in terms of value. UPI transaction volume increased by 76.5% YoY in January 2021 and transaction value surged by nearly 100%. The growth has been mainly due to increase in online shopping due to COVID-19 restrictions as well as online sales on platforms including Flipkart and Amazon.

The payment market in India is further expected to grow significantly in India owing to growing digitalization in the country as well as government policies supporting financial inclusion. Also, the banking and fintech industry is expected to see large players building business models offering convergent financial services, further increasing competition in the market.

To gain a foothold, the company could focus on low and medium socio economic group as Bajaj has a strong customer base in consumer electronic and vehicle financing sectors.

To know more and gain deeper understanding of mobile payment in India, click here.