Digital gold is the new war zone for PhonePe, Amazon and Google in India

With Covid-19 impacting buying sentiment, the tech giants are leaving no stone unturned to woo customers to buy digital gold on instalments across the country, including smaller towns

When Ram Mohan (name changed) from Sangvi village in Telangana wanted to buy gold for his sister’s wedding sometime this year, he faced a huge challenge as the physical gold stores were shut due to the coronavirus pandemic. Also, given the occasion, the delivery of the gold had to happen on time. But there was no guarantee on that as the country was under lockdown. It is then Ram Mohan bought ‘digital gold’ on online payments platform PhonePe. The Walmart-owned firm expedited the delivery process so that the physical gold could reach his residence before his sister’s wedding. The PhonePe team was in touch with him and the provider all through to ensure the timely delivery of gold.

Ram Mohan is among millions of people across the country who are buying ‘digital gold’ which is becoming the next big battleground for players such as PhonePe, Amazon, Google and Alibaba-backed Paytm. With the Covid-19 impacting the gold industry as well as the buying sentiment, these companies are leaving no stone unturned to woo customers purchase gold on instalment basis across the country including small towns and cities. They are also helping to deliver the gold products on time for occasions such as marriage or festivals with the help of technology, which is bringing a lot of transparency in this space.

"Gold holds great significance amongst Indians," said Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India.  “Considering the reach leading fintech players have among millennials this is certainly a battleground to look out for.” 

Pahwa said digital gold provides safety, security and flexibility to invest as little or much as customers desire with an option to convert it to physical gold post-investment period providing a good investment option to them. 

PhonePe said that it has emerged as the largest platform for buying 'digital gold' with over 35 per cent market share. It has seen a more than 6X jump in the volume of gold sold in the festival season this year (21 days starting from Dussehra till Diwali).

Customers from over 18,500 pin codes across India have so far bought gold on PhonePe with over 60 per cent of customers from small towns and cities. The purity of gold, backed by convenience and also the fact that people can buy in really small quantities every month, accumulate it over time and get delivery at home is a big draw for these customers.

“We want to make it easier for people to buy gold like buying from the offline market and also get it delivered,” said Sameer Nigam, founder and chief executive officer of PhonePe, in an interview.

PhonePe had launched the gold category in December 2017. Over the last three years, it has partnered with gold and silver products providers SafeGold and MMTC-PAMP to get users across the country to buy gold online. The gold bought on PhonePe is 24K real gold that can be bought anytime, according to the customer’s budget, starting as low as Re 1.

Besides PhonePe, customers from across India have shown a great deal of interest in buying gold online on other platforms as well such as Amazon, Google and Paytm. All these platforms have seen a significant increase in the number of customers who purchase gold in the run-up to and during various festivals including Akshaya Tritiya, Ganesh Chaturthi, Onam and Dhanteras.

E-commerce giant Amazon said it believes in innovating on behalf of the customers to create newer experiences for them. As part of this commitment, it is constantly evaluating new areas and opportunities to connect with and serve the customers. This has led to Amazon Pay, the payments arm of the firm, to launch digital gold services in partnership with SafeGold. Customers can now buy digital gold for as little as Rs 5 in a hassle-free, convenient manner. Amazon said they have the freedom to buy and sell the amount of gold at any time with competitive pricing and without any hassle of renting a locker for safety. 

“SafeGold makes saving in gold as convenient as possible, and we have an exciting roadmap of product features ahead, including delivery and exchange for jewellery,” said an Amazon spokesperson.

Google Pay had also launched digital gold as a category in 2019. Backed by MMTC-PAMP India, the LBMA (London Bullion Market Association) accredited gold refinery, users can buy 99.99 per cent 24 karat gold, right within the app. The gold, which can be purchased for any value, is stored on behalf of the user, in secure vaults and can be sold at any time at the latest price. According to the sources,  in the current festive season, Google Pay ran attractive offers and was also promoting Gold as a part of the ‘Go India’ engagement campaign.

Digital payments firm Paytm recently said it has recorded 2x growth in the digital gold transactions during the last six months. Since the beginning of this financial year, new users have increased by 50 per cent and the average order value is up by 60 per cent. With this, the total transaction volume on the platform has crossed the milestone of 5,000 kg. 

The company has also announced the launch of its high-value transaction product feature. Here users would be able to buy Paytm Gold worth up to Rs 1 crore in one go on its app. Previously, it was possible for users to buy gold only up to Rs 2 lakh in a single transaction.

Over 73 million people have bought Paytm Gold on the platform till now. Almost 40 per cent of these buyers are from smaller cities and towns, which reflects that now people across the country are considering digital gold as a serious investment option.

Pahwa of EY said technology is helping provide customers real-time pricing information about gold, anytime access, security, flexible investment options in both amount or quantity. This is certainly helping bring in transparency, flexibility and control to customers. 

“The online gold market is sub 2 per cent of the overall gold sales in India,” said Pahwa. “Customers, especially millennials, are increasingly willing to purchase and invest in gold online, providing players in the space a good opportunity to capitalise on."

Digital Gold Rush

. Due to Covid-19 pandemic, there is an increase in the adoption of digital gold.

. PhonePe, Amazon, Google, Paytm are competing to woo the customers to buy gold.

. Technology is bringing a lot of transparency in this space.

. PhonePe has 35 per cent market share in 'digital gold’.

. It saw more than 6X jump in the volume of gold sold in the festival season.

. Amazon has a roadmap of product features ahead for digital gold, including delivery and exchange for jewellery.

. Google Pay ran attractive offers for digital gold in the current festive season.

. Paytm recently recorded 2x growth in the digital gold transactions during the last 6 months.