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45. Payment Digest — I

Hope you & your loved ones are safe at home.

The payment domain which is dynamic and messy…continues to be the same even while we were locked down! You might have read so many news articles about how payments grew during lockdown or how the future of payment will be and so on (many genuine but mostly sponsored). The good thing is, regulators, card schemes, the government and courts, still continue to shape this industry.

I am starting a periodic series of news articles and updates of payment world that I find interesting

Recurring Payments

Two important developments took place in the recurring payments area:

  1. Increase in eNACH limit

NPCI revised the upper limit per debit from Rs.1 Lakh to Rs.10 Lakh (except for prepaid recharges). That is a good move considering B2B and investment sectors might need higher limits.

Still, the solution has limitations with respect to real time debit status, payment flow experience, inclusion of current accounts (that have a maker-checker process) and not all banks are covered in this solution.

2. UPI auto-pay

NPCI launched the most awaited recurring payment solution, UPI Auto Pay, on the first day of the Global FinTech Fest.

Earlier avatar of UPI mandate was for one time debit and that has limited use cases. Best usage (considering product limitation) that I saw was for IPO subscriptions on Zerodha. But in UPI Auto-Pay, you can register one time and debit multiple times (including one time).

All earlier recurring payment solutions have certain positives and few limitations (Read Here & Here). Similarly, UPI AutoPay has its limitations too: A user can revoke mandates very easily at any time, plus the maximum amount per debit is Rs.2000. Sure, the solution will have takers in hyperlocal, food, OTT, bill payment sectors but we need to wait and watch how the traditional & high ticket businesses (Mutual Fund, Insurance, Utility & NBFC) react to this solution. (Not talking about initial excitement but practical adoption by the user).

Like me, even you might be having many questions about UPI Auto-Pay. What will be the work around for above Rs.2000 transaction, what merchant can do when a user revokes a mandate, what happens if I change the bank, will it have TPV feature — for MF sector, will it come under Negotiable payment instruments Act? etc.).

Interesting solution with many interesting questions — will write a separate article about it

Silver Bullet — QR Code

How to popularise payments for day to day purchase? Solution: QR Code.

How to facilitate agent collection? Solution: QR Code

How to convert Cash on Delivery to online payment? Solution: QR Code

People are scared to touch ATM buttons? Solution: QR Code

QR code is like the Yoga’ of the payment world… for any problem, it is “the solution” :).

While PayTM, PhonePe, BharatPe & AmazonPay have popularised static QRs at stores, traditional POS players (whose main business is on cards) implemented QR capabilities… Payment Aggregators also developed QR based solution (Read — Here, Here, Here) and ‘somehow’ they all decided to call it ‘ePOS’ (can’t believe all the companies call it with the same name…need some creativity in naming as well)

Anyway, the point is, QR acceptance is high and will continues to grow…so RBI wants to take a look at it and fix potential problems…meaning? Define framework, bring in standardisation and may be, regulate it. RBI has invited suggestions and recommendations from the public… let’s wait and watch what happens next.

Acquisition rumours of BillDesk

Rumours are rumours but I couldn’t ignore this one… India Ideas Limited, also known as BillDesk is up for sale at $2.5 Billion. If it is true, then it is an end of an era in India’s digital payments story.

You would have never heard about one of the oldest and the most profitable PG, unless you are from the payments domain or have paid a utility bill (and by mistake noticed the logo). BillDesk is a media shy company, you won’t hear much about its three founders or about their company.

“For a successful technology, reality must take precedence over public relations, for nature cannot be fooled” Richard Feynman

Over the last two decades, BillDesk dominated the bill payment space with EBPP solution and continued to dominate the space even after the launch of BBPS (although NPCI launched BBPS to give level-playing field for others) with the formidable trinity of ‘BillDesk — Bank — Billers’.

Then why sell? There are many theories about this — Read this The Ken Article.

Doesn’t matter who buys BillDesk… I always admired this company, its founders’ vision and the business they built.

Gone with the ‘Wire (card)’

Wirecard misplaced ~$1.9 billion and stated that the money is in the Philippines (like we say sometimes, “it must have fallen under the bed, I am sure it’s there”). And then agreed that it was a huge fraud and eventually filed for insolvency. Wirecard has a long history of such ‘magic’ accounting but somehow, at one point, they made it to DAX 30 index.

India Connection? Wirecard had acquired Great India Retail at an inflated price of $254M in 2015 and provides its mPOS devices.

Anyway, from the prestigious DAX 30 group, Wirecard is now part of notorious group of Enron and Satyam.

Google Pay started lending business!!!

G Pay will neither issue the credit nor collect it but other NBFCs who are on the platform will do the heavy lifting. The wrapper or TSP is a clever business model — G Pay will facilitate lending without becoming an NBFC, the same way G Pay is facilitating UPI payments without requiring to be a payment system operator. (G Pay also won the court case where RBI confirmed that G Pay is Third Party App provider so doesn’t have to be a PSO)

‘Whatsup’ Whatsapp?

I am waiting since 2018 for the full launch of WhatsApp payment. (My reason: I don’t like having multiple Apps, so i get to delete my UPI App if WhatsApp will take care of forwarding memes as well as my payment requirements… yeah.. personal quirks!!!).

I read that WhatsApp Pay is inching closer to its launch and hope the WhatsApp Payment ban in Brazil will expedite their plans in India. (lost one market, so gain another)

Come…come…welcome

Rapyd, a London based Payments Company, entered India… Hurray… What does it mean for us (As customer, as merchant, as competitor or as a partner)? Not sure. The reason I say that, is because when Stripe came to India in 2017 and many thought the ‘payment miracle’ would happen, nothing happened for a year and nothing continued to happen. Btw… Netherland headquartered, Adyen is here, as well!!!

I am sure many more will come…why not! This is the 2nd biggest country (population) with huge potential.

But as we say in the Payments business…more is not always merrier :(

Last one… nothing to do with Indian payment ecosystem but super interesting:

What if a country’s 80% of transactions go digital? Isn’t it like living in ‘Narnia of Digital Payment’ :)

Zimbabwe has achieved this through mobile payments and then, the government decided to ban mobile payments. Yes banned… Why? Read this interesting story here:

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