PhonePe to create world's biggest ATM network of 2 mn in India by year end

Topics PhonePe | ATM | Paytm

PhonePe says it will by the end of this year create an Automated Teller Machine (ATM) network of 2 million, helping the Walmart-owned service to fight rivals Alibaba-backed Paytm, Google Pay and Amazon Pay as they compete in India’s crowded digital payments market.

The service—billed as India’s first and world’s largest—enables neighbourhood stores to act as ATMs for PhonePe users. It had a pilot run in Delhi-NCR and is now being rolled out across 500,000 shops in 300 cities.

Subscribers use the PhonePe app to locate shops offering the ATM service and then click the "withdraw" button to transfer an amount to the merchant. Once the amount is transferred, the merchant gives the customer cash equal to the amount transferred. PhonePe will not charge for the service and it has set a withdrawal limit of Rs 1,000 for now.

India has 200,000 ATMs that frequently run out of cash and they are fewer than those in BRICS nations, according to the International Monetary Fund. PhonePe hopes to fill in this gap.

"We are going way beyond payments and building connections between the consumers and our merchants. The value we are creating is that you as a consumer would be able to discover merchants (on PhonePe) and the merchants would be able to list themselves and build their visibility to all the PhonePe customers in the vicinity," said Vivek Locheb, head of offline business development at PhonePe. "We would be able to enable discovery and commerce, where the customer can communicate with the merchants through the app or go to the store. This would promote the business of the merchants." 

PhonePe says it has around 9.5 million merchants and 69 per cent of its transactions originate from Tier-2 and Tier-3 cities. The PhonePe ATM service is seeing a lot of traction from places such as Bareilly in Uttar Pradesh, Vapi in Gujarat, Sangli in Maharashtra, Chitradurga in Karnataka and Puri in Odisha.

"Compared to metros the density of ATMs is very less in tier-2 and tier-3 cities. We are creating the right type of financial inclusion, where people who have never seen an ATM, would now be able to withdraw the cash," said Locheb.

India has returned to using cash three years after the government demonetised high value currency notes. About 72 per cent of India’s consumer transactions take place in cash, double the rate in China, according to a report by Credit Suisse Group AG. Experts said that in offline commerce, it goes beyond 80 per cent, where people operate on cash.

Sameer Nigam-led PhonePe is using geotagging, the process of adding geographical identification metadata, to make the experience of discovering and reaching the merchant offering ATM services seamless. The firm is also able to help navigate the consumer to reach the merchant's location. This ensures that the customer's experience is complete without any friction.

Key Highlights

  • PhonePe ATM service enables neighbourhood stores to act as ATMs.
  • The firm is now rolling out the service across 5 lakh offline shops in 300 cities.
  • The service has already become larger than India's ATM network of about 2 lakh.
  • PhonePe ATM is seeing a lot of traction from Tier-2 and Tier-3 cities like Bareilly, Vapi, Sangli, Chitradurga, and Puri.
  • Cash is still the king in India even after three years of demonetisation.
  • About  72% of India’s consumer transactions take place in cash, double the rate in China.


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