Paytm Soundbox Vs The Rest: Battle Heats Up With Card Payment Introduction

Paytm, one of the leading Indian fintech companies, has unveiled a game-changing addition to its Soundbox lineup, introducing a new variant that accepts card payments. With a competitive price tag of Rs 999, the latest Soundbox variant boasts an impressive five-day battery life, making it an affordable and practical solution for merchants. This innovative device serves as both a Bluetooth speaker and a payment acceptance terminal, enabling music playback while facilitating seamless digital transactions.

Paytm's founder and CEO, Vijay Shekhar Sharma, emphasised, “We are very happy to bring this device that accepts cards from all networks including American Express, Visa, Mastercard, and RuPay.”

This strategic move not only enhances Paytm's presence in the digital payments sector but also solidifies its reputation as a pioneer in the field of ‘Soundbox’.

The Evolution Of Digital Payment Speakers (Soundbox)

The introduction of the Paytm Soundbox in 2019 marked the initiation of a trend in India's digital payment landscape. For two years, Paytm held a monopoly in this niche market. However, the success of the Soundbox drew the attention of competitors, including PhonePe and BharatPe, who launched their own versions in the past year. Even tech giant Google joined the fray earlier this year with its own pilot.

Notably, traditional banks such as HDFC Bank, State Bank of India, and IndusInd Bank are also tinkering in this segment, emphasising the growing importance of digital payments and Soundboxes in India. Despite the heightened competition, Bank of America (BofA) Securities reported in June that Paytm's first-mover advantage in the space would continue to be a significant asset.

The New Paytm Soundbox Variant

Designed to accept card payments, the new Paytm Soundbox requires a tap-enabled debit or credit card. It allows a maximum payment of Rs 5,000 per tap. The device offers alerts in 11 languages, customisable by the merchant through the Paytm for Business app, catering to India’s diverse linguistic preferences.

Bhavesh Gupta, President and COO at Paytm, said, “We have been pioneers of building in India and our devices have reached merchants already. This is one more product that shows our innovation, all payment players in the industry can copy according to their benefits.”

Market Potential And Impact

Currently, there are approximately 10 million Soundboxes in the Indian market, with Paytm deploying approximately 8.5 million of them. Paytm believes it has the potential to sell an additional 40-50 million units over the next three to five years.

According to BofA Securities, Paytm could add 15 million new customers for Soundbox devices in the next two to three years. The Soundbox has already made a significant impact on digital transactions, with Paytm reporting 13,721 million Soundbox-based transactions in the previous fiscal year, contributing to substantial paper savings.

Paytm’s latest financial results for Q1 FY24 reveal that merchant subscriptions have more than doubled to 79 lakh (7.9 million), compared to 38 lakh (3.8 million) Soundbox subscribers in the same period the previous year.

Competition And Future Prospects

Rivals like PhonePe and Google Pay are actively competing in this space, with Pine Labs also launching Mini, a QR and card acceptance device (minus soundbox) for small merchants priced at Rs 1,200. However, Paytm's subscription model and the consistent demand for its Soundbox give it a competitive edge.

“While competitors may offer free Soundboxes to lure merchants, Paytm charges around Rs 100/month, ensuring high visibility on subscription revenue,” said BofA Securities in June. They expect EBIT margins to be around 40 per cent in the steady state, with a payback period of 12-14 months per box.

Despite the competitive landscape, BofA Securities had said it expected Paytm to maintain steady growth in this segment and other verticals, driven by high-margin businesses and cost-control initiatives.

Card Payments And The Festive Season

The timing of the card payment feature introduction aligns perfectly with the upcoming festive season, which typically sees a surge in consumer spending. With credit card spends reaching record highs in India, Paytm's Soundbox is poised to capitalise on the increasing trend in card transactions.

In July of this year, credit card expenditures surged to an unprecedented Rs 1.44 lakh crore, marking a substantial 5.5 percent uptick from the previous month, which had set a benchmark at Rs 1.41 lakh crore in May. The Reserve Bank of India's data compilation revealed that the banking sector introduced nearly 11.9 lakh new credit cards in July, contributing to the expansion of the outstanding credit card base from 8.86 crore in the previous month to a robust 8.99 crore. Meanwhile, the debit card numbers were recorded at over 97 crore.

As the festive season approaches, both credit card and debit card numbers are expected to rise further, providing ample opportunities for Paytm Soundboxes to facilitate transactions and enhance the convenience of digital payments.

Paytm's latest Soundbox variant, equipped with card payment capabilities, signifies another milestone in the evolution of digital payment speakers in India. With stiff competition and a growing market, Paytm continues to lead the way in the digital payment revolution, with its innovative products driving financial inclusion and convenience for merchants and consumers across the country.

Paytm shares ended Monday trading session down 0.16 per cent at Rs 856 on BSE.