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How did this happen? A few answers from behavioral economics and other fields...
Cashbacks = Instant gratification. Credit cards give points which brilliant people like me convert into Kingfisher miles or JetMiles. And one day they go poof. Then we learn never to do that again. Incentives matter.
Convinience 01: The only time people don’t have phone in their hands is when they are in shower and now even that will change with waterpoof phones. You don’t have to take out wallet, find card, swipe, punch Pin, then wait. The user interphase of Paytm is stunningly fast and good
Convinience 02: Backend connectivity with apps like Zomato and Swiggy. Ordering food has never been easier.
Convinience 03: The QR code. It’s everywhere. You cant miss it. Just scan and pay. With facial recognition the whole thing takes less than 5 seconds. Credit cards can’t beat that.
Convinience 04: Connectivity to bank and UPI: super easy to transfer funds to Paytm and deliver them interest-free float. 😊
Social Proof. If everyone is using it and if you are not, then you want to do it too. The more you delay, the more outdated you appear to be. This is how Über took off too. The “cool” factor: Paytm karo. Cool bano.
A lot of the above factors also contribute towards the invocation of “availability hueristic.” Paytm is just more available. It’s in the palm of your hands. Over time, it becomes habit-forming and then you are hooked (in a good way).
Availability is also invoked through advertising. Cricket fields. Airports. Billboards. TV. Print media. The more the money is spent on advertising, the more the image of Paytm is printed on the brains of people who see the ads.
Intertia on the part of credit card companies. They don’t know what’s hit them. They are too committed and too entrenched in their old ways (commitment bias) Plus they don’t want to use their money to fight Paytm. They are in denial mode.
Demographics: Old people who use credit cards tend to die. Young ones who sleep with their smartphones don’t want credit cards. Their numbers are growing and it’s only a matter of time...
Finally, the relentless focus of the Paytm's founder with s̶k̶i̶n̶ soul in the game...
Credit card operations are just units of banks run by hired hands who have no skin in the game. They are not willing to take risks. They are not hungry enough.
Credit card operations are just units of banks run by hired hands who have no skin in the game. They are not willing to take risks. They are not hungry enough.
