The changing face of money - Technology is finally playing the role it was designed to do

By Gagandeep Sapra

India is the center of the world, whether it is the next big brand launching here, or the CEO of the largest mobile phone company flying in to visit the market, with it’s potential 600 Billion US$ Retail Industry Estimates (40,785 x 100 Crore Rupees), and an ecommerce foot print of just about 5% of this market - the Market Potential in India is on the rise, and what India needs now is a Payment Revolution.

1982, Delhi has become the center of attention for the world, we will soon be hosting the Asiad Games, while the city goes through an overhaul, something else is changing - the first few set of Credit cards are coming into the hands of people, my dad is one of them - he has a diners club card, he tells me that this is the way of the future - that we will all be paying with plastic, no need to carry cash or worry about soiled and torn notes, or running to the bank to take out money. Later that night we are at a dinner, and the restaurant says - they can’t take a card, they don’t have a machine. The reality is we are still far away.

1996, Delhi - I get myself an American Express card, after all I travel quite a bit, though one need not goto the bank to take out money as you can always use an ATM card, but carrying plastic is much easier than carrying cash, later that evening I go to buy my first laptop, the Compaq Showroom at Nehru Place, declines my request - they say - they dont’ accept American Express. I realised, I should either look for shops that take the card before I go in - or check with them before I bill, it becomes a habbit. The Reality still is, that we are far away from a better form of making payments.

2001, Mumbai - My Wife and I are in Mumbai for some work, we are at a dinner, and we decide to pay by card, the sign at the door and even the folder that our invoice came in says Master Card Welcome, only to be told that the merchant will want to charge us an additional 2% if we pay by card. Reality: Cards are becoming common place, but you pay at transaction fee over and above, depending on the merchant or what you are buying.

Late 2014, Bangalore: I have just gotten off a plane, and am going to take an Uber Cab to get to my office, and am told by the App I need to setup a Wallet, a PayTM app needs to be downloaded if I want a cab - I get irritated, till a few days back my Credit card worked perfectly fine, but well I need the cab and I download the app, only to be told that I need to now first add value to my wallet - i.e transfer money from my credit card / net banking to the wallet - I reluctantly add Rs. 500, roughly the fare that I will pay, worrying who is going to find what happened to this virtual money, and where is it - after all I have already paid off my card, I will need to settle my bill laer. Question: Is this how things will be, I am used to Credit Cards, I find them safe - have been lucky and methodical so that I have not had a Credit Card default or been a victim of a scam - I don’t need this wallet.

2016: I use a wallet for mostly everything, paying for Uber Rides, recharing my DTH, hiring a car, and even paying the kirana store next door. The FUTURE is Here.

I remember long back in the late 1990’s, we were talking about how our business should get a Credit Card Swipe Machine, I run a company that provides Business to Business Services, and I was talking to the guys at Bank of Punjab to get their Machine which my billing / collection guy could take to the customer end, and swipe their card, I also did not want to worry about the transaction fee - as long as I was getting paid on time. We got a machine, and we were able to do some transactions, other business colleagues were interested in it too - but getting a POS machine was not an easy business, it was full of documentation and deposits. But that was the late 1990’s, and if you are a business owner - getting a machine from your bank is still one of those difficult things that you have to do, and this is why the Daily Needs store around the corner, still does not have a machine, and neither does your Dhobi or your Akhbaar-wallah.

Banks have always claimed it is due to a lower penetration of Credt Cards, after all if one has to look at statistical data, the numbers are pegged anywhere close to 20 million credit card holders (not users) across India, that is a very small number. Though in the last few years Debit cards have become common place, as you get one everytime you open an account and sometimes even when you don’t want it. Chances of you using your Debit / Credit Card though is really dependent on how you see security.

World over the way we make payments has changed, the United States has one of the highest density of plastic payments, and also has great companies and payment services providers such as Paypal and Square - that have enabled small next door merchants to be able to charge you seamlessly. Apple Pay and Android Pay are also changing things, but here in India there is a new story happening, a story that is making the world sit up and think - is the future of Payments - Mobile Wallets.

Though Mobile Wallets have their upside, they also have their downsides too. The Growth in the mobile phone market, and smaller merchants wanting to get paid in time and paid to their bank account has only resulted in a  phenomenal growth over the last few months, as the fight accelerates between Mobile Wallet companies, and more and more merchants come on board, it’s a win win time for the consumer.

PayTM

Leading the Pack is PayTM, this company out of Noida has changed the paradigm of payments in the last few years, as I mentioned earlier, my first interaction with them was when Uber asked me to sign up for this wallet, there were other wallet companies too, I knew of but I wondered why Uber was choosing PayTM. I had heard from friends and cousins on how they were making cash backs by paying their Electricity and Telephone bills via PayTM and I was just being lazy - my credit card worked. Over the last few years, Vijay Shekhar Sharma, the man at it’s helm and his team has built out some amazing solutions. Yes they also have an ecommerce front end that lets you buy movie tickets, Bus tickets, even tickets to an ammusmenent park to even book a car online.

PayTM ensures there are offers and cash backs on each purchase, and you get some part of the money back as PayTM credits evertime you pay with them, this ensures a stickiness for users, but where they actually make a difference is in their Customer Support and Ease of Use of their Website and Mobile App.

Their Recent Tie up with ClearTax even gives you Rs. 100 back, if you pay your Income Tax online using PayTM’s wallet mechanism, changing the way we Indian’s have done transactions. While Municipal Corporation Websites, and Railway Tickets still want to charge a surcharge everytime you paid online, PayTM is going ahead and returning cash in one way or the Other.

PayTM is also leading the pack in the offline world, chances are you have seen a sticker stuck inside a cab, an auto rickshaw and even your newspaper wallah now is giving out visiting cards, that give his phone number and let you pay him via the PayTM app. You can find merchants in Karnal to Karur, Coonoor to Calicut, stickers of PayTM accepted here have popped up every where, though some of these merchants don’t have a clue on how to go about it, but some have a full detailed card that explains how you can pay the merchant.

Mobikwik

If you have bought a pizza from Dominos, or bought your groceries from Big Bazaar, you would have seen a sticker that says Mobikwik Accepted Here. Though the name does not pop up as often as PayTM, Mobikwik has also managed to build out a great offline presence. Though their online wallet use is much higher, and with about 25000 retail outlets that accept Mobikwik you can purchase using a wallet.

Like PayTM mobikwik also has offers on most of your purchases, whether you are buying a movie ticket, or buying a pizza, recharging your phone to paying your electricity bill, Mobikwik has some offer running there. Though conversations are limited around this company, but they also claim to have launched the first of it’s kind Loyalty card, that lets you earn points everytime you spend, just like a credit card.

This Delhi based team of Upasana Taku and Bipin Preet Singh have been trying to resolve the payment solution in their own way. Just like PayTM does peer to peer payments, MobiKwik also offers you to do this, whether it is returning the money you had borrowed from a friend, or transferring money when your friend needs it, making payments to smaller merchants easier and quicker than getting a Point of Sale Machine setup, so don’t be surprised if your dhobi comes and tells you that you can pay him using Mobikwik.

Oxigen Wallet

Oxigen was one of the first companies around solving India’s payment challenges, with prepaid cards that you could buy in the offline world to pay for services online. Though designed as a prepaid card, over the years Oxigen has ventured into virtual credit cards, that you can preload and use across the Internet even where a wallet may not be accepted and secure your primary card, to enabling ecommerce websites such as Jabong and Shopclues as a payment solution provider while creating offers to use more and more of their wallet and gateway services.

Chances of you seeing Oxigen in the offline world though are minimal, they do have a presence, but we could not get certain numbers, though if you are to believe their website and press releases they claim to have over 200,000 offline retailers on their network, but over the research of this article, in the last 6 odd months, travelling across India, I have come across very few retailers who accept Oxigen, this does not mean that their reach is not there.

InstaMojo

While Wallet companies are making things easier for the consumer and how they pay, if you are a business and want to get paid by your customers online, wallets may not really be the solution depending on your billing size. A wallet is limited to Rs. 10,000 per transactiona, and if you sell services or goods which are higher than this, say handmade jewellery or art, you have limited solutions to accept payments onlie.

While we all wait for companies like Paypal to come into India, a payment gateway provider will not only need you to setup a website, run a lot of audits, but a ton of paperwork needs to be completed. Instamojo a Bangalore based startup has been changing all this since 2012.

All you need to do to start accepting payments is visit Instamojo.com and sign up. You provide the proof of your business, via a Cancelled Cheque for them to transfer money to your account, a PAN Card copy and other Business incorprotaion details, and you are setup to accept payments in less than 48 hours. The Transaction charges are very similar to to what a Bank may offer you with a POS, but there is no need to get a machine. You get a URL like https://instamojo.com/@yourcompany and you are ready to accept payments. The short URL just creates a form that says who are you paying to and let’s you add the amount you want to pay them. Transaction is seamless, and your phone with a browser, or the customers phone with a browser and a data connection is all you need to get the transaction done - no downloading of apps, or configuring of one time SMS to enable login, living to their Punchl ine of Fast, Reliable and Secure.

Instamojo also creates a virtual store for you, with generated links that can be put into your webiste to start selling online. You could be an offline seller who sells their services or goods in the real brick and mortar world, or you could be an online company that sells a product and ships it after you get the payment, Instamojo sets you up to accept payments immediately.

Though primary modes of payments on Instamojo are limited to Visa and Master Cards, you can on a special request add American Express as a payment option too. This will though increae your overall transaction fee, and will still limit you not to accept cards such as Diners Club.

MSwipe

If you have travelled to the US, and experienced paying using a credit card that was swipped with a reader on the phone or a tablet, and noticed that white square device called Square on top of it, wondering when would something like this happen in India, Meet MSwipe, India’s Answer to Square. A Company setup by Manish Patel in Mumbai in 2012, came out of a problem Manish faced everyday. His business involved distributing Alcoholic beverages and need to figure out a way to ensure his merchants were getting paid when they were selling. Credit Card Point of Sale Machines were limited and you could never find them in Alcohol Beverage Stores. Manish and his team of technologists, started working on a Reader that could get attached to a phone, and today offer a payment solution that is seamless, and works across Android, iOS and even  the Windows Phone Platform. Available in 3 Variants, 2 of the readers are designed to be plugged into mobile phone devices to allow you not only to swipe your card, but also use the Chip on your Chip+Pin card to make the payment, to a desktop solution that is designed for a store with a full keypad to enter the PIN.

WisePad their solution with a Chip reader and a keypad connects to your mobile device or your PC using Bluetooth, giving the safety and privacy to a user to enter their PIN yet enabling seamless transactions.

While MSwipe is largely focussed at Mumbai, it has started talking to merchants across the country to spread out. Though unlike Square, you can’t order an MSwipe online, and there is a full offline process to complete - but once you are onboardeded as a merchant, it is a seamless operation.

EzeTap

The challenges with wallets and other prepaid instruments is that chances are you have a wallet from say Freecharge, while the merchant wants you to pay using PayUMoney, and that means you have to go and download another app, set it up, add more value from your account, and then remember which wallet has how much money stored. While the companies that run Wallets are pretty friendly, there have been nightmare stories on the Internet in terms of user experience in taking their money out, EzeTap a startup out of Bangalore is changing this.

With their integration with the leading Indian Wallet Payment providers, that includes PayTM, MobiKwik and Freecharge amongst others Abhijit Bose of EzeTap is changing the way you will make payments in the future.

Designed for a Business, EzeTap provides the merchant with a mobile pos, that allows them to accept payments from various sources, so giving you a seamless experience of being able to pay cash, credit card, mobile wallet or even a peer to peer payment. Though what is limiting is that their mPos app is available only for Android phones at the moment.

Technology:

Technology today is solving a lot of human problems, and one of those problems has been exchanging money. All of us have been in a situation where the merchant said he did not have total change, or you were given a few candies in return to currency. While this may annoy you at the moment, the real challenge has been building a secure payment solution. Yes Credit Cards and Debit cards are secure ways of doing tranactions, but with quite a few users setting up their PINS as 1234 and leaving their Cards unattended or getting cloned, safety worries and conversations around plastic money theft have kept people scared.

Prepaid Instruments such as Mobile Wallets, allow you to get the peace of mind, that the only money that is at risk is the one in your wallet. One is also assured that the companies here that are leading the pack are responsive and customer friendly, unlike larger banks where it takes ages to get your conversation to a meaningful level, let alone find a solution. Banks and Telecom providers are also joining in and solving this on their side of things. Companies such as mSwipe, Instamojo and EzeTap are solving the other side of the solution, where merchants need to come online, and offer their services and products, so that you and me as a consumer can buy and transact easily.

Challenges:

While all this is a nice to read and hear, there are several other challenges that mar the payments Industry. Our policies and banking system is still lagging behind in age and in technology, while payment Solutions such as the Universal Payments Interface that RBI has envisaged still has not been able to get off ground, and IMPS that though works 24 x 7 requires pre-registration, and several other processes before you can make a payment, the biggest challenge to these new age payment mechanisms is a seamless and stable Internet connectivity over the mobile data network.

The other big challenge that has emerged in the last few days is that of regulation. Regulators do not understand the new businsses, from Governments being worried about the New Generation Cab Operators such as Ola and Uber, to Running after telephony service providers such as Knowlarity, the Government is still trying to play catch up. There is no clarity about how the Government and it’s regulations will fare when it comes to the Mobile Wallet, or the New Generation Payment Service providers, leaving a grey area of concern.

The Other major challenge is the sheer number of wallet companies that have come up in the recent few years, if you were to do a search, you can come across at-least 100 odd startups in different stages of growth, talkign about doing a solution in the payment Space. While companies such as PayTM and Mobikwik are leading the pack, chances of a conumer getting misled into downloading an app thinking it’s a wallet and transferring money to that wallet is a real danger, and hence regulators need to keep a close eye on not only what websites and companies come up, but also apps that get published on mobile stores. Security:

Mobile Wallets, and Mobile Point of Sale Machines depend on your Mobile phone, and this is where security comes into play. A few pointers such as keeping your phone on the latest operating system with all security patches applied is something you should start doing. You don’t want to be running a 2 year old operating system, with your phone holding the wallet and being a part of a hijack attemt.

Other security practices such as keeping your phoen always locked, using finger print where avialbale, and or a complex PIN / Pattern to unlock your device also keeps you secure. Remember the wallet has now moved from your back or your rear pocket into your hands, so the next time you hand over your phone to a stranger in distress to make that call, or your child’s friend to check out the latest game - be careful, and remember you won’t leave your wallet lying around, now would you.

Try avoiding using Unsecure Wireless access points or those Free WiFi locaitons when you are making a transaction. A transaction done over your mobile service providers data network may be slow but is more secure, than that open Wifi that you are tempted to use.

Science and Technology have always been seen as the Great Development Equalizers, including people from every walk of life, and taking them forward. In the last few years, the Internet, and the Smartphone have allowed us to connect, transact and develop the next set of entrepreneurs, of business owners, of people who want to participate in our economies, making the world a better place, and these Wallet Companies (Some named here, and enough we could not name) are making all this real. Cheers.

Gagandeep Sapra, is a technology entrepreneur who is commonly known as the big geek.