India Inc & COVID-19: How is the payments ecosystem dealing with the crisis?

Introduction

At the onset of the pandemic, the payments ecosystem was the first one experiencing a significant drop. The past few years have offered the payments industry dynamic growth because of technology advancements and digital transformation. However, a temporary yet prominent dip was observed in the revenue during the coronavirus pandemic. The consumer behavior changed, merchant purchases halted, and cash flow reduced due to a severe impact on many other ecosystems.  

Instamojo is one such leading provider in the payments ecosystem. It provides the simplest, most beautiful method to create online stores and accept online payments. Any small business owner can visit the platform and start creating an online store for free today.

Sampad Swain, CEO, and Co-Founder of Instamojo, joined us for a session on COVID-19 to discuss its impact on the payments ecosystem.

Impact of COVID-19 on Payments Ecosystem

Instamojo had just started working from home for only ten days and they already experienced a dip in demand – 40% to be specific.

Since the customer base was itself going through a tough time, a crisis situation was created in the payments ecosystem during the first COVID-19 wave. There was an instant decrease in the revenue of various industries, including education, hospitality, food & beverages, etc.

Instamojo, too, started observing this change a month before the actual lockdown; from the 5th of march. From around the 13th of March, the company had already started working from home and they were consistently observing the lowering revenue graph. On the next day of ‘Janta Curfew’, their revenue fall was nearly 40%.

“We literally saw our numbers fall hard even when COVID was just an elite phenomenon in India.”

While the payments ecosystem only experienced a considerably small dip (such as in the case of Instamojo and other payments services organizations), many industries saw a dip of 80-90% in revenue.

When the company started searching the last time when Instamojo faced a similar crisis, then it was revealed that this was the lowest low.

“We went back to the history of our geneses to understand when was the last time we saw that number. Interestingly, this was the lowest low. I think we had bottomed out.”

One of the reasons we observed a severe downfall in the payments ecosystem is the change in consumer habits. Apart from health and grocery supplies, the number of online transactions decreased in many industries reduced or completely stopped.

The First Disruption: Payments Ecosystem

The payments ecosystem is impacted by every minor disruption in the local or global market. Being on the front rows leaves its mark every time anything happens across the globe. This is because banking transactions define the finances of companies, professionals, and people, in general.

As a result, whenever the international market is experiencing any turbulence, the first influence is seen in the payments and banking ecosystem. However, this industry is also the first one to offer transformation, which is where the payments ecosystem also becomes the first one to rise from this dip.

“If we average it out, we were at -40% revenue ten days back, now we at 25-30%. Hopefully, around the end of the lockdown, we would be at a better place than where we are at now.”

Jump Back and Enter the Digital World

After 4-5 days into the lockdown, Instamojo experienced an increase in demand and numbers. Although offline purchases suffered a sudden halt, online purchases were still on the rise. As a result, after the 25th of April 2020, the numbers improved for Instamojo.

Essentially, for an organization like Instamojo that is offering many more services than just a payments ecosystem, it is easier to jump back into the market. The difference that they are making here is offering digital transformation in place of payments gateway setup.

“We are essentially helping someone to go digital or go online. We are here to stay for a long term.”

Any small business owner who used to harbour a mindset of avoiding the online market might have a completely different perspective today. Through Instamojo, these small business owners can set up an online store and accept payments without any hassle.

Conclusion

Although the payments ecosystem experienced a quick low at the onset of the pandemic, this industry was also the first one to rise. Due to a sudden increase in online transactions and a rise in the adoption of the digital, online payments infrastructure automatically improved over weeks.

Today, we are already at a point where the pandemic has brought an irreversible digital transformation. Customer experiences have evolved, buying habits have changed, and user demands have been modified. From here, there will be only an increase in the demand for online and digital transactions. Hence, Instamojo and other companies in the payments ecosystem will enjoy a rise in demand and revenue in the near future.