This is the first part of the series where we discuss the possibilities the brands can unlock by incorporating Pre-Paid Instruments (PPI) or E-Wallets into their ecosystem.
Pre-Paid Instruments are electronic devices, online services, or software that act as astorehouse for Credit/Debit cards, Bank accounts, and other monetaryinformation to help facilitate transactions seamlessly.
And D2C Brands?
Have you ever gone through the hassle of traveling miles to deliver a package urgently? Startups like WeFast (now Borzo) and Porter came to our rescue with their intra-city network to transport goods.
Couriers and postoffices have existed for years yet intra-city delivery within a day at affordable prices was a far-fetched idea made possible by the power of D2C or Direct to Consumer brands. The D2C model eliminates intermediaries such as aggregators and e-commerce platforms in order to reach customers.
D2C model has allowed brands the flexibility to experiment and provide more personalized solutions. This helps them to stand out the competition, by giving their branda better placement.
Installing both Porter and Borzo initially, I came across several customer retentions plays. Amongst them was "You have received Rs. 15 voucher for your next order". The urge to avail of benefits made me choose one app over theother in my orders. Today, I use only one of them.
Onboarding customers is not the end. The brands need to undertake activities toretain customers. PPI’s are one such way brands can increase customer retention.
But what differentiates PPI’s from other available retention strategies?
PPI’s add four main value propositions to a brand;
All the features mutually not only help brands in retaining customers but also lowering the CAC(Customer Acquisition Cost) and increasing the LTV (Lifetime Value).
Moreover, based onusability PPI’s offer three alternatives to choose from, brands have theflexibility to choose between these three alternatives.
For brands,semi-closed PPI’s are the most common form of PPI’s. Several brands like Uber (UberWallet) and Ola (Ola Money) operate on semi-closed PPI’s where the payment interface is not restricted to their respective apps. Such wallets usually have the backing of existing wallet operators (Paytm, MobiKwik, PhonePe, and a lotmore) account to their established payment networks.
On the other hand,closed PPI offer the most flexibility in terms of customization. These PPI’sare developed by WaaS (Wallet as a service) providers (AirShip, Zipcash, WalletFactory, etc). Several brands like H&M and Myntra operate using closed PPI’swhere they are limited to their respective apps.
However, incorporating PPI’s is not a one day task.
Amazon took 2 years to finally roll out the generic usable version of Amazon Pay. Based on the business model, the brands need to find the break even minimum for the value generated and incurred while incorporating these services.
Thus it would beearly to conclude PPI’s or e-wallets as an end-to-end solution for brands. There are certain challenges we’ll be assessing, including the new RBI guidelines for PPI instruments in the next series of this blog.