AGS CASE SOLUTION PROPOSAL NOTE

FOR STRATEGIC
PAYMENTS 2.0 PARTNERSHIP
INDIAN • The FMCG sector is dominated by cash. 97% of payments for
consumption goods by volume are in cash, and these make up 93%
FMCG of all payments by volume.
SECTOR • The Fast-Moving Consumer Goods (FMCG) sector in rural and
semi- urban India is estimated to cross US$ 100 billion by 2025.
• Even though some industries have moved to fully cashless
payments system, there are certain industries like FMCG which
have their end retailers and distributors still dealing in currency.
• This indicates there is much work to do in this area, but also
presents a major opportunity.
• While 44% of urban FMCG retailers have taken up digital
payment channels, rural distributors and retailers are less in
number at only 16%.
TRANSACTION • FMCG has grown a lot and it’s penetration in the rural market is 100%. But
their payments are still in older terms of currency.
S IN FMCG • A typical business transaction happens either through cash payment or RTGS
only when the amount is larger than a lakh.
• A distributor orders item from the manufacturer and pays for it using an RTGS.
There is scope for us to get business through payment gateways which some
companies are switching to nowadays.
• The retailers pay money to get their goods and are collected by the salesman of
the retailers. This gap could be bridged by introducing mobile payments in
these transactions.
• Rural market offers a very good opportunity for Payment solution providers to
exploit and get better sales.
SCENARIO • GCMMF and its 18 associated milk unions are paying around Rs
450 crore on weekly basis to 36 lakhs milk producers through
IN (GCMMF) 18,500 milk cooperatives in Gujarat.
AMUL • Amul has been giving payments to its milk producers through
cash. Two years back they have come up with the idea of
crediting them directly.
• They are seeing the need to go for cashless transactions for the
last couple of years. This is a huge potential for us to tap in. We
need to emphasize more on promoting the benefits of Digital
payments in their ecosystem.
• Amul has also gone online with “Amul online” where our
services can be implemented.
PROPOSAL • Since we see that the consumers have moved to digital
payments, it is high time the payments between retailers and
NOTE distributors should be made digital.
• We should be selling our POS machines to the distributors who
will bill their customer using the machines.
• A simple and better way is to make all the retailers and
distributors take up digital payments which is more beneficial in
the long run.
• Based on the level of business we can segregate them and start
introducing our online payments option in a pilot basis.
BENEFITS & • We can derive the benefits of ledger transactions for all the sale
that is happening in the market.
APPROACH
• This helps the company keep the track of receivables without
having to feed those details in to the system.

• Introducing switches and payment gateways for the distributors

helps them to make the transactions in smaller amounts. They
don’t have to wait for another week to make a bigger transaction.

• We can provide loyalty points and e-money which is usable at

hundreds of thousands of virtual and real stores.
THANK YOU