1. Bit by bit: When micro payments think big

Bit by bit: When micro payments think big

Thanks to their popularity and convenience, mobile wallets could plug the gap credit cards could never fill in India

By: | Published: January 19, 2016 12:54 AM

Quietly, there has been a major revolution afoot across India, one that does not get talked about as much as it should. And this is the mobile payments revolution. What started a few years ago as a convenience people turned to when they had to quickly add a R10 recharge on their prepaid phone, has now spawned into an economy of its own. India was willing to take the risk of mobile payments with Rs 10 and gradually this has helped the recharge companies garner trust and huge user bases. So much so that this confidence is now good enough for Indians to use these services to pay for anything from taxi rides to real estate bookings.

Credit card penetration in India is still facing a lot of hurdles and might continue to find resistance, but mobile wallets are slowly starting to fill this gap. While most of India might not have a credit card to turn to when they want to create a new Apple ID, they have no issues buying a new song or game using their mobile wallets. While it is a surprise that these payment options have not found native adoption on Google’s Android or Apple’s iOS for Indian users, the app developers have been wiser and are already tapping into this new no-cash economy. Taxi apps might be the one sector that makes the best use of a PayTM or a MobiKwik recharge; and it is when you queue up to enter a movie theatre that you see the sheer number of people showing their phones for scanning instead of presenting a physical ticket. This is the trickle-down effect.

The sheer number of users most of the top Indian mobile payment companies are now talking about is staggering. PayTM, for instance, claims over 100 million users, almost half the numbers of global net payment giant PayPal. We are nowhere near the penetration mobile payments have in Kenya for instance, but given the size of our population and economy, the numbers we have are significant too.

And there is some very Indian innovation happening around very Indian problems. It took me a while to understand the concept and I am still not sure it will work, but PaySe is interesting nonetheless. Ashutosh Pande, founder and chief innovation officer of PaySe, calls his product digital cash. “It retains the attributes of cash—offline, peer-to-peer and secure. PaySe utilises the latest advances in mobility, big data, open source and crypto tokenisation to deliver the world’s first secure offline peer-to-peer payment solution,” he explains. In simple words, the company offers a PurSe mobile wallet, almost like a credit card, to carry the digital cash offline and when a person withdraws PaySe digital cash is transferred into their PurSe. “They can use PaySe like cash or get it converted into cash. Any transaction where money is leaving the PurSe requires the user to enter a four-digit code to make a successful transaction,” explains Pande, who foresees banks, microfinance institutes, payments banks, small finance banks and e-commerce companies becoming part of the platform.

Trying to offer a more secure, unhackable solution in comparison to the mobile phone, Pande says PaySe is working on a slim SIM-based solution where the secure memory is provided in a stickON base that can be pasted onto the SIM card of a phone and the phone accessory called the PurSe. He says the bait for merchants to come on board will be the fact that there is no delay in crediting payments and there is no Merchant Discount Rate, which, at almost 2.5%, could be almost half his margin for some transactions. “The merchant realises the complete value of the transaction immediately. The funds are instantly accessible to the merchant; there is no dispute and no delayed credit,” he explains.

While it will be tough for a new platform and stream of thought to get wide currency in a market such as India, this is certainly the kind of innovative thinking that will help the country leapfrog the entire credit card gap in our economy. In addition, the segment is now clearly moving beyond micro-payments and transactions of up to R1 lakh can now be cleared if the users has got his KYC done. This, coupled with EMI options in the segment, could be what makes this ideal payment solution for India.


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  1. Hemen Parekh
    Jan 25, 2016 at 6:20 am
    GOING CASHLESS ? Government is encouraging use of Credit / Debit cards , in order to reduce cash payments , which , currently account for nearly 80 % of all payments Measures ( Positive and Negative ), being considered / announced , include : * Elimination of transaction charges on purchases of Petrol , using Credit Cards * Income Tax benefits for individuals making payments thru Debit / Credit Cards * Disclosure of PAN for # cash transactions above Rs 2 Lakhs # settling hotel bills that exceed Rs 50,000 # booking air tickets / tour packages , exceeding Rs 50,000 # opening a bank account ( except for Jan Dhan Yojana a/c ) * Incentives to shop keepers and traders to accept electronic payments While announcing these measures , revenue secretary , Shri Hasmukh Adhia said : " ...to collect information on certain types of transactions from third parties in a non-intrusive manner , the income-tax rules require quoting of PAN where the transactions exceed a specified limit " Are we missing the woods for the tree ? What can be more " non-intrusive " than embedding Rs 500 / 1,000 currency notes with RFID micro-chips , thinner than a hair ? Each sensor, continuously broadcasting its location to the Income Tax Authorities , even as it moves from one hand to another ? And " shouting from the rooftop " each physical location, where there is an aculation of Rs ONE CRORE worth of such notes ! And igning a UNIQUE Internet Protocol ( IP V 6.0 ) Address to each and every such high denomination currency notes ? - which could , even be its Currency Note Number ? Why bother to " incentivize " citizens to use electronic payments ? Why bother to introduce rules / regulations and make life difficult for everyone - including for those officers responsible for enforcement ? Just implement this and watch 90 % payments being made thru electronic means / devices , within 6 months ! I had sent my above mentioned suggestion to Shri Arun Jaitleyji , when Govt had put out a paper , " Draft Proposals For Facilitating Electronic Transactions " , and sought public comments Implementing this does not require ping any bill in Rajya Sabha ! If you have a better idea to dramatically reduce the menace of BLACK MONEY and CORRUPTION , in a single stroke , I request you to rush it to Shri Jaitley-ji , before 29 Feb 2016 ( Budget date ) at... * '' / '' Or , just forward this to him A recent news report spoke of printing of 30 Crore notes of Rs 1,000 denomination , WITHOUT that identifying silver thread Some of these defective notes even went into circulation ! Rest had to be destro This would never happen if a RFID micro-chip ( much thinner than that Silver thread ) were to be embedded in each note A Inspection device , costing no more than a few thousands of rupees and sitting on the Printing Line would immediately detect any note WITHOUT the RFID A bell will ring and a robotic arm would pick up and set aside such a defective note And if this was to happen to 10 notes in a row , the printing press will automatically shut down ! This technology is already working in hundreds of factories around the World And embedding a RFID chip is much simpler than inserting that Silver thread ! ---------------------------------------------------------------------------------------------------- hemen parekh 24 Jan 2016

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