Coaching PMs| Prev - Sr.Dir Product @ Myntra , Product & Growth @ FreeCharge, Product @ Zynga
Stripe processed $1Trillion in 2023 and generated ~$17Bn in Revenue. PhonePe processed $1Trillion in 2023 and generated ~$350Mn in Revenue. Razorpay processed $150Bn in 2023 and generated ~ $273Mn in Revenue Large TAM is insufficient. Take rates matters. It defines how much value you can capture in a market. Stripe's TAM can technically be the US's GDP. PhonePe & RazorPays TAM can technically be India's GDP. And yet it's the take rates which influences revenues. Take rate is influenced by a variety of factors - competition, cost structures, regulation, value add etc. Understand what governs your market's take rate and not get biased only by TAM. #productmanagement #strategy #businessmodel
Is this for PhonePe as a platform or only the payment gateway. Won't stripe and Razorpay be a better comparison as they have a similar business model or use case. Although I think Stripe would still win by a big margin,
You mean SOM?
There are limitations of ecosystems constrained by regulators that's causing this asymmetry. May not be construed a rule concluding relationship between large TAM vs revenue. What do you think?
I think that's an incorrect interpretation of TAM. TAM by definition means the maximum possible REVENUE that can be made and NOT sum of transaction volume, GMV etc. If you're interpreting that as TAM that's already an error.
Well. the whole game in an emerging market is to use the main TAM as the trojan horse and bundle a higher margin, lower TAM, below the radar service - for eg., ads on e-commerce or BNPL/partnerships on fintech or distribution
Holistic view, 43-47% of the TPV through Gateways is via UPI. Near zero rates and stiff competition are the blockers here to stay. Given Stripe’s penetration in the world market, additional Fixed fee and currency conversion charges also help.
Take rate in India would be low compared to non-Indian markets where Stripe mostly focuses..:). Other point of view would be B2B vs B2C business model where latter will always have a much less take rate compared to the former.
Stripe cheats & pays very low conversions from USD. Example INR 59 when the conversion rate is Rs.83.51. No response when asked for calculations.
Payments Product & Consumer Experiences @ Pine Labs
6moPayment is a highly regulated space, and revenue depends on the regulator. UPI has been continuously impacting cards and other payment methods, which used to be the revenue generators. However, volume is down quarter by quarter, which is bleeding fintech organizations like Razorpay and Pine Labs. UPI is free and will continue to be free until the regulator provides clarification. When that day comes, PhonePe will become the biggest revenue generator machine. Shouldn't we look at market capturing as a metrics till the time the game is in the grey area like take rate?