If Pine Labs doesn’t make this move to online payments, it risks getting Nokia-⁠⁠⁠ed

Even though the gifting platform has been growing 200% year-on-year in India, gift cards are yet to achieve mass appeal the way they have in other markets. “In India, gift cards are a $2 billion market compared to the total $65 billion gifting market. But in the US, gift cards are a $175 billion market,” said TP Pratap, the co-founder of the 12-year-old Qwikcilver.

While that’s because Indian retail totals to about $795 billion while the US is at $3.63 trillion, there has also been reluctance from retailers as they prefer signing on to loyalty programs rather than gifts, said Pratap.

Role of the employees

In India, gift card sales are mostly driven by companies buying them for incentivizing their employees. About 75% of the gift card sales that Qwikcilver sees is from enterprises, says Pratap.

Though the company has been profitable for two straight years, Pratap sees a lot of headroom for growth. Moreover, it has international plans. The company services some of the biggest retailers like Abu-Dhabi based hypermarket chain Lulu Group, which gives wings to Pine Labs’ international plans. “We only sold because the early investors wanted an exit,” says Pratap. Investors like Accel Partners, Helion Venture Partners, Sistema Asia Fund and Amazon have put $22 million in Qwikcilver.

“Gift, as a category, is growing at a high double-digit and both our own gift business and Qwikcilver’s business grew close to triple-digit year-on-year last year,” says Bindra. Pine Labs has its own gifting distribution platform called Pine Perks, but it doesn’t do the processing.

In fact, it simply distributes gift cards processed by Qwikcilver. “Also, we see a trend of offline retailers moving online in India. Both those developments give us the confidence that this is a high-growth category,” adds Bindra.

How much rich is the data?

But what is enabling the reverse, as in the case of Pine Labs, is the richness of the data. Even though online spending is a small slice of total payments, the quality of data that payment gateways and online merchants can access supersedes data that’s available to offline merchants.

For instance, online companies know the geographical location, time of payment, frequency of purchase, the device from which it was bought, whether it was for yourself or someone else, the whole gamut. In comparison, traditional PoS terminals, at best, can provide the retailer details of location and expenditure. And unlike online payment gateways that can track spending across different types of retailers, Pine Labs can’t do that by being strictly offline.

“We want to scale up the online payments and value-added offerings for our merchants this year. The Qwikcilver acquisition will help. We are also revamping a payment gateway product. We should be able to share more plans in three months,” says Bindra.

Pine Labs may be the first, but others are catching up. Ezetap, too, wants to partner with payment gateways to be able to give one complete payment suite to its merchants, said its CEO Byas Nambisan.

Navigating the things

There is value in this, says Rao of Lifestyle. “If one company can give a complete suite, it will help us navigate the entire omnichannel,” he says.

This combination of data from online and offline transactions will help companies triangulate consumers better, thereby providing richer profiling and improved targeting, says Pratyush Prasanna, GM of Asia for Poynt, a Palo Alto-based smart PoS maker.

So what is easier? For an offline company to go online or vice-versa?

“What works in Pine Labs’ favor is that it is easier for offline payments processors to start processing online payments as it is about enabling a commoditized tech solution,” says Prasanna. But that is only in theory.

So far, there’s been no evidence to back offline-online crossovers. PayU, an online payment gateway, which had plans to install 25,000 PoS terminals, within one year of getting into acquiring merchants, sold the terminals to M-Swipe. This, of course, wasn’t an encouraging sign.

And yet, it hasn’t deterred payments companies from reaching for the grass on the other side.

For Pine Labs though, the going has been good. So far, the company has had no reason to look in the rearview mirror. But that’s quickly changing, as the likes of Reliance Jio, a telco with cross-sector ambitions from content to payments, are shaking things up.