Suman Layak, ET Bureau | 8 Sep, 2013, 10.42AM IST26
Salary on CardsThe tags can be stuck to phones or Icards or any other convenient object. In the first two weeks, since the 2,000 tags were activated this year, around Rs 2 lakh was loaded onto them by students and of that 70% spent, says Das. Naveen Surya, managing director of ITZ Cash, says the NFC tag is a variation of what the company has been offering for a few years now as prepaid payment cards.
ITZ Cash is the second largest player among prepaid cards and is targeting its offerings largely at people who make small transactions.
Currently ITZ Cash is participating in a pilot in partnership with
HDFC Bank in Adhaar-linked prepaid cards. Surya says: "The goal is to see if direct benefit transfer payments can go into
pre-paid cards instead of bank accounts. It will reduce the burden of opening so many bank accounts for the government and the banking system."
An
ICICI Bank spokesperson adds: "The ICICI Bank Saral Money Prepaid Card is fully equipped for direct benefit transfers. Also it provides the customers with an access to the entire VISA-enabled ATM network creating an inter-operable direct benefit transfer solution." There is a whole list of
non-banks like ITZ Cash and Hermes that have launched pre-paid cards taking advantage of the RBI's guidelines on pre-paid instruments and the easier norms for identification and documentation that these cards have compared to bank accounts.
ITZ Cash has managed to sell its pre-paid cards for salary payments to corporate clients. Consider Aniket Saxena, director of
Spic and Span Housekeepers that operates in the National Capital Region. Saxena's men are mostly migrant workers and do not report to duty in an office but at different places where they are assigned housekeeping duties. Paying out salaries in cash was a nightmare, Saxena says.
"Disbursing salary by cash would take four to five hours. A pre-paid card on the other hand needs less documentation and I can easily upload the salaries." The cost of the card — around Rs 55 — is being borne by the employees who are happy to have an instrument that allows them to withdraw cash from any ATM.
Vipin Gurang, director of Delhi-based Proficient Retail and
Agrotech, has also gone in for about 40 salary pre-paid cards for his employees, who are happy as they all get their salaries at the same time. Sevan Rai, 37, an employee who hails from Darjeeling, says: "This is better, the money remains safe even if I lose my purse. I am allowed to withdraw money from
IDBI Bank ATMs for free."
Joining in the FunMigrant workers, especially, find it difficult to go to a bank as they often do not have address proof at their workplace. However, if they would not go to a bank, a bank can surely come to them, what with most of them hitching on to the pre-paid cards bandwagon.
Axis Bank was the largest player in pre-paid cards last year. However, this year ICICI Bank has taken the lead in pre-paid cards with 40% of the market. Western Union has been the largest player in remittances from abroad into India and now it has also entered the domestic transfers business. Kiran Shetty, MD of Western Union, says with a presence in 1 lakh locations in India, the company is ideally placed to offer domestic money transfers and is targeting rural customers.
"Of the 1.2 billion people in India at least half do not have access to banking instruments. This is a great opportunity for us," he says. Western Union is using the banking correspondent (BC) route; it is a BC for
Kotak Bank and offers money transfers through the National Electronics Funds Transfer System — which takes longer than IMPS. Shetty says Western Union is working to launch IMPS-based services soon. ICICI Bank is one of the five banks participating in the Saral Money Pre-paid Card and is also offering pre-paid cards with Western Union.
Yes Bank for instance has tied up with at least 13 players, including
ITZ Cash and Hermes, as its BCs who offer money transfer facilities using Yes Bank's network and the IMPS facility of NPCIL. Then there are the telecom operators who can offer a mobile wallet to subscribers.
Airtel, Vodafone and
Tata Teleservices offer the mobile money transfer facility to its subscribers.
Vodafone launched M Pesa money transfer service in collaboration with
ICICI Bank in Agra on September 4. Suresh Sethi, business head for M Pesa, said Vodafone's subsidiary company
MComm Solutions has an RBI licence to offer a semiclosed wallet
(see Instruments of Change) to subscribers. With cash loaded onto these wallets, subscribers are now able to send money to any bank account anywhere in India as well as to other M Pesa account holders. M Pesa account holders get a mobile wallet issued by MComm and a linked Mobile Money Account with ICICI Bank.
"Our tie-up with ICICI Bank comes into play when we offer to cash out the money from our outlets instead of transferring it to a bank account. So after ICICI Bank does the KYC, we are able to send an SMS pass code to the receiver and then he can walk into one of our outlets and take the cash, without the need to go into the bank at all," Sethi explains.
Innovation is the KeyHe adds that while India has about 100,000 bank branches there are 900 million mobile phones and enabling these is the key. "We have 7,800 Vodafone outlets and 25,000 agent outlets and my network is 65% rural. We will enable our agents to be BCs of the bank and provide cash out to the receiver," Sethi says.
In money transfers, eliminating the need to go to the bank to receive cash is one step that will be a big boost. While many of the money transfer agents are BCs, Jaiswal (the franchisee for Hermes quoted at the beginning of this feature) is not. BCs are representatives of the bank while Jaiswal is working as a representative of Hermes. Innovation, clearly, is ruling the day.
Talking of innovations, Yes Bank has developed a mobile card swiping device that allows companies to take a payment at the doorstep of a customer.
Blue Dart has already launched a service for cash-on-delivery that can now also be card-payment-on delivery.
Anand Kumar Bajaj, president and chief innovation officer of Yes Bank, says: "The mobile POS works with any touch screen phone that the vendor will carry, on which the customer has to sign with a pen or a stylus or even his finger. One can also get the image of the charge slip on the phone." Then there is a cash-note acceptor machine that Yes Bank is set to launch. It will be housed in malls and markets and retailers can deposit their cash in the machine and it will be credited to their bank accounts.
Bajaj has an interesting pilot to talk about that Yes Bank worked on with Pepsi's largest bottler in India, Pearl Drinks. The bottler's truck would drop soft drink bottles with retailers and bring back almost Rs 70,000 cash at the end of the day. With each truck returning with that kind of cash every evening, the logistics can be complex.
Yes Bank already had BCs along the routes, which started accepting the cash. So a truck driver would visit around 10 retailers and drop the cash with a BC, and then move on to the next 10 retailers — so by the time he returned to the bottler's premises he had also submitted most of the cash with BCs that went straight into the bottler's bank accounts.
The key here again has been the IMPS service NPCIL. In the first full year after its launch in November 2010, IMPS saw 95,000 transactions (2011-12). In 2012-13 that figure went up to 12.28 lakh transactions. In the first five months of 2013-14 the number of transactions has already crossed 25 lakh. There are worries with IMPS too.
On July 4, for instance, a bunch of transactions went through but the confirmation SMSes never landed and there was confusion all around. Sources say 4,000 transactions were affected. However, NPCIL insists that all were sorted out by end of day.
AP Hota, managing director of NPCIL, says: "There are new emerging payment systems and we are trying to become a less-cash society, even if we cannot be a cashless one." He speaks about interesting possibilities like cash at POS where people can withdraw cash from retailers. With M Pesa for instance one can even pay for sweets at Shrinathji and Birdy's.
That is the kind of sweet ending
Raghuram Rajan would surely like.
On July 4, for instance, a bunch of transactions went through but the confirmation SMSes never landed and there was confusion all around. Sources say 4,000 transactions were affected. However, NPCIL insists that all were sorted out by end of day.
AP Hota, managing director of NPCIL, says: "There are new emerging payment systems and we are trying to become a less-cash society, even if we cannot be a cashless one." He speaks about interesting possibilities like cash at POS where people can withdraw cash from retailers. With M Pesa for instance one can even pay for sweets at Shrinathji and Birdy's.
That is the kind of sweet ending
Raghuram Rajan would surely like.
Excerpt from Rajan's first speech as RBI governor, in which he talked about anytime payments:We want to make payments anywhere anytime a reality. Only banks are currently allowed to deploy Point-of-Sale terminals, and these are largely set up by a few banks in urban areas. As announced in the Annual Monetary Policy statement, we will facilitate the setting up of "white" POS devices and mini ATMs by nonbank entities to cover the country so as to improve access to financial services in rural and remote areas. Currently holders of pre-paid instruments issued by non-bank entities are not allowed to withdraw cash from the outstanding balances in their pre-paid cards or electronic wallets. Given the vast potential of such instruments in meeting payments and remittance needs in remote areas, we intend to conduct a pilot enabling cash payments using such instruments and Aadhaar based identification. Finally, there is substantial potential for mobile-based payments. We will set up a Technical Committee to examine the feasibility of using encrypted SMSbased funds transfer using an application that can run on any type of handset. We will also work to get banks and mobile companies to cooperate in rolling out mobile payments. Mobile payments can be a game changer both in the financial sector as well as to mobile companies.
