Key points:
- Paytm processed 1 billion transactions in the quarter ended March 2018
- The firm employs 200 product managers and over 700 engineers
- Its data science lab in Toronto, Canada, develops key tech tools
- App analytics and machine learning are used to retain users and for up-selling
Mobile wallets--mobile apps used to pay for recharges, groceries and other daily items--may have come of age in an increasingly digital India, but much goes behind-the-scenes to keep them working well and users hooked.
Paytm, which has 200 million monthly active users and processed close to 1 billion transactions in the quarter ended March 2018, is a case in point. It competes with MobiKwik, FreeCharge, PhonePe and several others in this space.
Discussing the tech strategy at the company in a recent interview, Deepak Abbot (pictured), senior vice president of One97 Communications Ltd, which owns and operates Paytm, said, “Though a payments firm, we are a technology company at the core and everyone here, including Vijay, is a hardcore techie--he even calls mid-level engineers sometimes to discuss architecture design.” (Vijay Shekhar Sharma is the chief executive of Paytm.)
Abbot said that most in top positions at the company either have technology background or are “quite comfortable” with tech. “Culturally, we have a tech mindset. That is another reason we have been able to build a very complex product in a flexible way.”
Sharing insights into what goes on ‘under the hood’ as they say in tech, Abbot said that quick decision-making and a product-centric approach drive software development. “In our meetings, once an idea is crystallized, Vijay is very clear about what product to build. As a result, the product managers are also clear how to get it done. And when the engineers are given very specific details, they are able to quickly build it,” he revealed.
The simplicity of the Paytm app belies its complex architecture and the number of people that work on it. For instance, Abbot said that there are as many as 200 product managers and 700-800 engineers working on different aspects of the app.
But how does Paytm define a product? “At Paytm, a product is defined as anything a consumer—be it is an end consumer, a merchant or a marketplace seller--interacts with,” said Abbot. For example, recharge is a product in itself. Paytm’s implementation of Unified Payments Interface (UPI), again, is a product (UPI is an easy, instantaneous payment system built by the National Payments Corporation of India or the NPCI). “And then you build use-cases on top of UPI such as P2P, P2M and B2B payments. Wallet--the most used product of Paytm--is another,” said Abbot. (P2P, P2M and B2B stand for person-to-person, person-to-merchant and business-to-business respectively.)
The idea of keeping all these products within the same Paytm app, according to him, is that users should move from one product to another seamlessly—something that requires “a highly scalable product” to be built.
Integration of multiple products within the same app also helps Paytm cross-sell more easily to customers, who may first use one product before being “nudged towards” others, said Abbot.
Talking about stickiness of the app and up-selling to users, he said, “We have observed that if a customer has only used Paytm for recharge, then the retention rate for such a user is 40% after three months. But if we can upgrade him to send money to others, they become power users of Paytm and the retention improves dramatically to 70%.”
Industry experts forecast bright days ahead for mobile wallets. The number of mobile wallet users is expected to grow from the current 200-250 million to around 500 million in the next couple of years, according to Probir Roy, co-founder of Paymate and an independent director at Nazara Technologies. While he believes that “the next big thing” will be “interoperability” among different wallets, he noted that it is a tough space to operate in and some consolidation is “bound to happen” in the coming years. “My guess is that the top two or three companies will have 80% of the market,” he concluded.
------Paytm Labs: Managing customer lifecycles-----
To make the most of app analytics that capture user behaviour, Paytm’s data science lab, Paytm Labs, in Toronto, Canada, works on developing multiple software tools. One such key tool is CLM or Customer Lifecycle Management.
According to Deepak Abbot, senior vice president of the company who is based at Paytm’s headquarters at Noida near Delhi, what CLM does is “catch every ‘signal’ from the app”. Explaining how it works, he said, “If you use the app for UPI, it segments you as a UPI user; if you do a recharge, it marks you as a recharge user. It also upgrades you automatically based on your behaviour or purchase history. So, for instance, if you make an electricity bill payment or a post-paid bill payment, it upgrades you to a post-paid user.” There is a lot of granularity built into the CLM tool to classify and reward different levels of users at different times.
The tool puts users in different segments and generates actionable triggers accordingly. “For example, if a premium user who earlier made a money transfer of Rs 5,000 has not used the app for a month, he will be shown a cashback offer or an ad on Facebook,” said Abbot. Similarly, alerts are shown for soon-to-expire mobile recharges and other bills. “The CLM tool uses such alerts and offers to get those customers back into the app. And if they are already in the app, it will customise the view for them by showing up frequently used icons upfront and hiding others,” he explained.
The entire user data in the Paytm app goes into a “data lake”, and the team in Canada uses it to formulate the rules of the risk engine and other software. The data lake, Abbot explained further, is a repository of multiple sources of data, including phone usage data, hardware data and address book; then there is transactional data plus the behavioural data (where the users navigate inside the app, how much time they spend shopping, etc). All this data is used through machine learning (ML) algorithms so that the alerts and promotions can be automated and personalized.
The Toronto team comprises 70 data scientists and engineers and, besides the CLM tool, has developed the company’s risk and customer score engines. “We just plug those products here (in India) and start using them,” said Abbot.
---##----
(Note: An edited version of the above post first appeared on www.livemint.com - where I used to work until recently. The interaction with Deepak Abbot took place during my Mint tenure.)
- Paytm processed 1 billion transactions in the quarter ended March 2018
- The firm employs 200 product managers and over 700 engineers
- Its data science lab in Toronto, Canada, develops key tech tools
- App analytics and machine learning are used to retain users and for up-selling
Mobile wallets--mobile apps used to pay for recharges, groceries and other daily items--may have come of age in an increasingly digital India, but much goes behind-the-scenes to keep them working well and users hooked.
Paytm, which has 200 million monthly active users and processed close to 1 billion transactions in the quarter ended March 2018, is a case in point. It competes with MobiKwik, FreeCharge, PhonePe and several others in this space.
Discussing the tech strategy at the company in a recent interview, Deepak Abbot (pictured), senior vice president of One97 Communications Ltd, which owns and operates Paytm, said, “Though a payments firm, we are a technology company at the core and everyone here, including Vijay, is a hardcore techie--he even calls mid-level engineers sometimes to discuss architecture design.” (Vijay Shekhar Sharma is the chief executive of Paytm.)
Abbot said that most in top positions at the company either have technology background or are “quite comfortable” with tech. “Culturally, we have a tech mindset. That is another reason we have been able to build a very complex product in a flexible way.”
Sharing insights into what goes on ‘under the hood’ as they say in tech, Abbot said that quick decision-making and a product-centric approach drive software development. “In our meetings, once an idea is crystallized, Vijay is very clear about what product to build. As a result, the product managers are also clear how to get it done. And when the engineers are given very specific details, they are able to quickly build it,” he revealed.The simplicity of the Paytm app belies its complex architecture and the number of people that work on it. For instance, Abbot said that there are as many as 200 product managers and 700-800 engineers working on different aspects of the app.
But how does Paytm define a product? “At Paytm, a product is defined as anything a consumer—be it is an end consumer, a merchant or a marketplace seller--interacts with,” said Abbot. For example, recharge is a product in itself. Paytm’s implementation of Unified Payments Interface (UPI), again, is a product (UPI is an easy, instantaneous payment system built by the National Payments Corporation of India or the NPCI). “And then you build use-cases on top of UPI such as P2P, P2M and B2B payments. Wallet--the most used product of Paytm--is another,” said Abbot. (P2P, P2M and B2B stand for person-to-person, person-to-merchant and business-to-business respectively.)
The idea of keeping all these products within the same Paytm app, according to him, is that users should move from one product to another seamlessly—something that requires “a highly scalable product” to be built.
Integration of multiple products within the same app also helps Paytm cross-sell more easily to customers, who may first use one product before being “nudged towards” others, said Abbot.
Talking about stickiness of the app and up-selling to users, he said, “We have observed that if a customer has only used Paytm for recharge, then the retention rate for such a user is 40% after three months. But if we can upgrade him to send money to others, they become power users of Paytm and the retention improves dramatically to 70%.”
Industry experts forecast bright days ahead for mobile wallets. The number of mobile wallet users is expected to grow from the current 200-250 million to around 500 million in the next couple of years, according to Probir Roy, co-founder of Paymate and an independent director at Nazara Technologies. While he believes that “the next big thing” will be “interoperability” among different wallets, he noted that it is a tough space to operate in and some consolidation is “bound to happen” in the coming years. “My guess is that the top two or three companies will have 80% of the market,” he concluded.
------Paytm Labs: Managing customer lifecycles-----
To make the most of app analytics that capture user behaviour, Paytm’s data science lab, Paytm Labs, in Toronto, Canada, works on developing multiple software tools. One such key tool is CLM or Customer Lifecycle Management.
According to Deepak Abbot, senior vice president of the company who is based at Paytm’s headquarters at Noida near Delhi, what CLM does is “catch every ‘signal’ from the app”. Explaining how it works, he said, “If you use the app for UPI, it segments you as a UPI user; if you do a recharge, it marks you as a recharge user. It also upgrades you automatically based on your behaviour or purchase history. So, for instance, if you make an electricity bill payment or a post-paid bill payment, it upgrades you to a post-paid user.” There is a lot of granularity built into the CLM tool to classify and reward different levels of users at different times.
The tool puts users in different segments and generates actionable triggers accordingly. “For example, if a premium user who earlier made a money transfer of Rs 5,000 has not used the app for a month, he will be shown a cashback offer or an ad on Facebook,” said Abbot. Similarly, alerts are shown for soon-to-expire mobile recharges and other bills. “The CLM tool uses such alerts and offers to get those customers back into the app. And if they are already in the app, it will customise the view for them by showing up frequently used icons upfront and hiding others,” he explained.
The entire user data in the Paytm app goes into a “data lake”, and the team in Canada uses it to formulate the rules of the risk engine and other software. The data lake, Abbot explained further, is a repository of multiple sources of data, including phone usage data, hardware data and address book; then there is transactional data plus the behavioural data (where the users navigate inside the app, how much time they spend shopping, etc). All this data is used through machine learning (ML) algorithms so that the alerts and promotions can be automated and personalized.
The Toronto team comprises 70 data scientists and engineers and, besides the CLM tool, has developed the company’s risk and customer score engines. “We just plug those products here (in India) and start using them,” said Abbot.
---##----
(Note: An edited version of the above post first appeared on www.livemint.com - where I used to work until recently. The interaction with Deepak Abbot took place during my Mint tenure.)
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