PhonePe to roll back PoS plan after facility hurdle, may stay with QR codes

PhonePe, the digital payments wallet of e-commerce major Flipkart, is rethinking its plan for a million Point of Sale (PoS) machines in the country, sources said.

The Bengaluru-based company faced manufacturing hurdles for these, as also reluctance from both sellers and customers. Hence the rethink. Instead, it might use QR-code technology to push offline transactions, it is learnt.

As an experiment, the company distributed as many as 10,000 PoS machines in Bengaluru since last October. PhonePe had said during the launch that these machines had been indigenously designed, being powered by Bluetooth technology. It was meant to serve merchants of all sizes — traditional store owners, motor fuel outlets, food chains, quick service restaurants and others. It is claimed that PhonePe has over 300,000 offline and online merchant clients — in food, travel, groceries, movie ticketing and other services. “PhonePe, with this unique PoS solution, makes transactions easier for customers. All they need to do is bring their phone close to the PoS device and it automatically shows the merchant details and amount to be paid. The merchant does not need Internet to be able to confirm that a transaction was successful. The device is the lowest cost PoS device in the world serving the needs of small merchants,” the company had then said. 

Yet, and despite not needing an internet connection, “The company has not seen much adoption of the device,” said a n informed source. Adding: “In the first phase the firm distributed the device among more than 5,000 merchants. It did not see a greater increase in the number of transactions happening via the devices. Also, manufacturing these devices was becoming a problem. This is the reason the company is rethinking its PoS strategy.”

A detailed questionnaire sent to Flipkart did not elicit any response. 

Sector experts say QR codes are less cumbersome than Bluetooth technology. “People have got more used to QR codes. It is easier to operate and faster as well. Also, a merchant does not need to invest in anything; he just has to have the QR code pasted in his shop. Merchants can use their existing smartphones at no extra cost,” added one.

Sources say the company is in the process of distributing QR codes to its merchant base. This would help in faster implementtion of its offline sale plan. The company wants to expand PhonePe’s offline payments option rapidly, so that it can direct both online and offline transactions via the digital wallet.

Alibaba, Paytm and MobiKwik all use QR codes as a main offline payment option. PhonePe claims to have over 90 million installed and the app drives one of the highest number of merchant UPI (Unified Payments Interface) transactions in the country.