92. Payment Patterns

I haven’t written anything here since the article about the announcement of the Auth N Capture (Revised Edition) book.

Anyway, I never had a fixed pattern of writing.

The human mind is obsessed with ‘patterns’ and tries to see patterns everywhere. In nature, stock markets, human behaviour, lunch breaks, and even the mood swings of your manager.

Patterns give us comfort that ‘we understand’ and give us (false) sense that we can control what we understand.

Payments do have patterns… and these patterns are specific to a sector and merchants within those sectors.

Let’s look at these patterns over a year, month and at day level:

Yearly Cycle

Although payments happen throughout the year, there is a seasonality where either payments happen during that time (for specific sectors or merchants) or volume jumps.

• Jan-Feb-March (JFM) is the peak sales period for insurers (Life and Health) as people buy insurance to get tax exemption. Mutual Fund ELSS purchases peak during this period
• As a sports-watching nation, we watch all matches (be it India Vs Australia or Zimbabwe Vs Ireland). Truly global people with plenty of time to timepass. Among these events, the IPL (Indian Premier League) is very important. Crores of people play Fantasy Sports. People subscribe to the OTT that is telecasting matches and order food while watching.
• We have tens of major festivals throughout the year. The big ones are Dasara and Deepavali. Apart from Amazon’s Great Indian Festival and Flipkart’s Big Billion Days sales, almost all large-medium-small eCommerce and D2C merchants run ‘sales programs’.
• On a few auspicious days (Akshaya Tritiya and Dhanatrayodashi/Dhanteras, Ugadi) people buy gold and silver. Digital gold and Gold ETFs purchases also peak on those days.
• Travel sector sees a big jump during school holidays, major festivals, and year end.
• Education is quite diverse as the fees cycle can be monthly, quarterly or semester wise (bi-annually). But still Apr-June is a big fees payment season.

Payment traffic is not uniformly distributed during this peak season.

• Payments spike just before the commencement of the match during IPL
• Customers choke eCommerce platforms the first few minutes of big sales events
• People paying tax on the last day of the last day of the deadline

These are those critical points, where everything and anything a merchant or payment service provider has built will be put to the test. So a special attention is needed at those points.

Then there are EVENTS — They happen randomly throughout the year

1. Concerts: This is a big thing now. People flock to buy tickets and choke merchant’s/bank’s/PA’s systems.
2. IPOs and market dip: These are big investment opportunities and people want to ‘get some action’ and will not be happy if they can’t make most of it if the broker’s or PA/Bank’s systems didn’t work properly.
3. New Year;s eve (although nothing much changes on the 1st of Jan) but people do order food or purchase things.

Why is it important to understand patterns of merchants/sectors

For merchants:

• Scale up your systems — Ready to manage the spikes (before the start of match or first few mins of sales’). Upgrade your App (if needed)
• Partnerships: Forge partnerships for payment processing and offers (with banks, PAs, wallets etc.) well in advance
• Operations: After a big sales promotion event, the sales reduce and refunds increase. If settlement is not sufficient then refunds will fail/delay. So pre-fund your PA’s escrow.

For Payment Aggregators:

• Time the selling cycle: Merchants do not do last moment partnerships. Many merchants go into code freeze a couple of months before their peak season. If you want to catch these peak seasons then close your deals in advance. An Insurance merchant will not do a new PA partnership in Jan, they do it in Oct-Dec.
• Be Ready: To manage spikes of those merchant
• Additional loads: Identify correlated merchants and be ready to manage additional traffic from those merchants.
• Streamline Operations: You may expect an increase in failure or delays in refunds, and expect more chargebacks. So work with merchants for reducing these.

Monthly payment cycles are a bit boring.

“People work to pay their bills” — that is exactly what happens… people get a salary and start paying.

Beginning of the month is all about paying back credit card bills, loan amount, rent/flat maintenance fee, children’s school fee, and utility bills.

If one has more money then they will do investments (MF SIPs and stock purchase).

Few old school people may buy groceries (Uff… planners… soon to be extinct class)

We live on a DAILY basis, which is very mundane and boring and so are the payments.

If you start looking closely then you will see different patterns among different user bases or demography. Insurance purchase increases on weekends, whereas share purchase is done during day time (before 3PM).

Changing Patterns:

Patterns do change — by various forces and then the new trend emerges; and new trends become patterns.

Example: J-F-M is peak season for insurers because people buy insurance to show as proof to save on income tax. But in the new income tax regime, there is no such provision. So surely the glory month of J-F-M will fade.

Couple of years back, when a new mobile was released, people would buy on eCommerce marketplaces and get it in 1–2 days. Now, people can get new phones in 10 minutes on these quick commerce sites. So quick commerce who were doing grocery deliveries are now delivering anything; they are now eCommerce marketplaces on cocaine.

In the world of instant gratification, easy access to credit, and abundance of choices, these patterns will get disrupted and then new patterns will emerge.

On-top of that people also show the pattern of working -

If you are a payment professional then you will not be able to sell much from October to December (people go into Festival and holiday mood) or in March (Financial Year ending so finance teams of merchants are busy). So effectively, you have a few months to close the deals and get integrated so you can see ‘some’ action.

As a payment professional, I find solace that there are patterns, and just like everyone else, I find ‘comfort’ in those patterns.