| Log in
Photo Credit: Ankit Kumar/VCCircle
TMT

Why Paytm’s entry into meal voucher biz isn’t giving Sodexo the jitters

03 May, 2017

Up until now, benefits and rewards services company Sodexo has been synonymous with meal vouchers in Indian offices, a near-monopoly if you will. However, with the Reserve Bank of India’s guidelines for prepaid payment instruments requiring all meal-voucher companies to go digital by the end of the year, the sector is in a state of flux. Though traditional players like Sodexo and Edenred India’s Ticket Restaurant still dominate it, a number of digital and technology-led companies have either thrown their hat into the ring, or firming up plans for a foray.

For instance, India’s largest digital wallet firm Paytm entered the space last month. In January 2016, serial entrepreneur Bhavin Turakhia had launched Zeta Meal Vouchers, the first product rolled out by his digital payments platform Zeta.

Although Sodexo is well-entrenched in the system, courtesy of the immense goodwill and a solid client base created over the years, it would be naive of it to assume that a mere shift to digital will do the trick, for it is going to be up against some heavily-funded rivals that have the financial wherewithal to discount their way to the top.

But Sodexo isn’t taking things for granted. To maintain its lead, it is banking on a multi-pronged approach including physical cards, digitisation of the gifting business and its unique positioning as a full-bouquet, business-to-business (B2B) player. Before we delve into its strategy, a bit of background.

Sodexo SVC India Pvt. Ltd is no digital neophyte—it embarked on the journey three years ago, spending the first two years on building its proprietary acceptance network. “Before digitising our meal vouchers, we decided to get the network and compliance right. Thus, we deployed 32,000 terminals across 700 cities in the country,” Suvodeep Das, vice president for marketing at Sodexo, told VCCircle.

After setting up the card acceptance infrastructure, the company issued physical cards early last year. (Interestingly, Sodexo does not use MasterCard and Visa networks, and is both an issuer and acquirer of cards to ensure complete compliance.)

Sodexo rents terminals and installs custom software in them for transactions to go through. Hence, it’s not a capital expenditure-based model, but depends solely on the number of transactions. It works with payments companies like Pine Labs and Worldline, among others, which get a commission from Sodexo for every transaction.

In June last year, the company launched its mobile app, to which customers can link their Sodexo cards and make payments. It also launched a mobile payment solution in January this year.

Under its employee benefit programme, the company earns a management fee from employers. It also earns revenue by charging a marketing fee to merchants in lieu of generating footfall for them, Das added.

Sodexo currently serves around 10,000 clients in the country, is accepted at 15,000 outlets, and claims to have 3 million monthly active consumers.

New offerings

Sodexo, which also has a presence in corporate gifting, is digitising the business, for which it has partnered with over 11,000 retailers across the country.

“We will launch a card for our gifting business in the next 2-3 months, and it will be part of the same Sodexo app,” Das explained.

Besides, the company is planning to roll out a wellness benefit scheme.

“We are working on various components, such as fitness and financial wellness, on our wellness benefit platform. We wanted to focus on the digitisation of our core solutions, i.e., meal and gift, and then we will look into other benefit programmes,” he said.

B2B differentiator

Sodexo feels its distinct B2B positioning and early-mover advantage will keep it ahead of competition.

“B2B is a different ball game than business-to-consumer (B2C). Consumer business is all about mass, adoption, month-on-month growth, etc, while B2B is relationship building. We make sure that we have strong relationships with clients, have invested in technology, and have the most compliant solution, so it’s a winning combination of the three,” Das added.

Sodexo also thinks that its multiple employee benefit offerings, including meals and gifting, and other solutions from the global portfolio that the company is getting to India will position it as a complete player. “Clients appreciate that we have several things to offer. When you are just a means of payment, there’s no differentiation,” he explained.

Besides, the meal voucher business could just be an opportunity for digital companies, including the likes of Paytm, but for Sodexo, it is bread and butter. “The kind of effort, systems and people we put is far superior than what it would have been if it was just one more thing we did,” Das said.

Clearly, despite the arrival of Paytm on the scene, which has strong investor backing and a captive customer base of over 200 million, Sodexo seems undeterred.

“Sodexo is ready to do whatever it takes to retain market leadership. We think technology, compliance (proprietary network), and new solutions will help us maintain our leadership position,” Das signed off.

Like this report? Sign up for our daily newsletter to get our top reports.


Leave Your Comment
Now Paytm looks to disrupt Sodexo, other meal voucher biz

Now Paytm looks to disrupt Sodexo, other meal voucher biz

Arti Singh 7 months ago
Noida-based mobile wallet company Paytm has decided to get into direct...
Bhavin Turakhia's digital meal voucher venture Zeta backs ZingHR

Bhavin Turakhia’s digital meal voucher venture Zeta backs ZingHR

Arti Singh 5 months ago
Mumbai-based fintech startup Zeta, which offers digital employee solutions, has...
Exclusive: Ola buys majority stake in mobile wallet ZipCash

Exclusive: Ola buys majority stake in mobile wallet ZipCash

Manu P Toms 2 years ago
In the race to stay ahead in India’s hyper-competitive online taxi...
No Comments

Why Paytm’s entry into meal voucher biz isn’t giving Sodexo the jitters

Powered by WordPress.com VIP