Panelists: Virendra Gupta, Founder/CEO, Newshunt and iPayy; Kunal Shah, Founder, Freecharge; Sekhar Rao, Founder/CEO, Juno Tele; Anshoo Sharma, Principal, Lightspeed Ventures India
Moderator: Nikhil Pahwa, Founder and Editor, MediaNama
India being a country with trust deficit, hence largely being a cash country, prefers payment methods involving cash, such as cash on delivery, in contrary to digital payment modes, such as carrier payments and in-app purchases. Unlike countries like US, there is a long way to go before credit cards become the popular method of payment and cash on delivery takes a back seat. According to Reserve Bank of India, in the month of June, 2014, only 19.48 million outstanding credit cards were there in the country. This in contrast to over 100 million smartphone users indicates the comfort consumers feel when paying in cash. However, users are warming up to the idea of online transactions. With e-commerce growing and more transactions being made through various digital payment modes, two scenarios of skepticism and hope can now be seen. With Nikhil Pahwa, Founder and Editor of MediaNama, moderating the discussion, the future of transactions in India was deliberated about.
Despite the trust deficits seen in India when it comes to digital modes of payment, there is an increase in the number of online transactions made, though, still insignificant when compared to cash payments. Various types of payment methods are now available with not all gaining equal popularity. Carrier billing is one such payment method that can be seen rising in India. In spite of the previous experience of mobile payments witnessed by consumers where they were falsely billed for mobile value added services, carrier billing which also charge the purchases to the mobile phone bill, do not bill without the consumers consent. It provides a safe and consent based billing and is mostly used for purchase of digital content such as apps and tokens within apps. When talked to Sekhar Rao, Founder and CEO of Juno Tele, about carrier billing used by them, he said, “Like many online transactions where the consumer is redirected to a billing gateway and asked for their credit card password, our transactions happen in an independent third party manner, this methodology used ensures merchants are not involved when financial transactions are happening.” Through such methods Juno Tele is trying to build the trust deficit that had gone from the mobile ecosystem due to lack of an efficient system before.
Like Juno Tele, Newshunt uses carrier billing as well. Newshunt is a language platform providing news in 12 different local languages, with their recently launched section for eBooks. They wanted a mass payment infrastructure for the billing of their eBooks. During this journey of finding the apt payment mechanism, they realized the need of a reliable carrier billing platform, which motivated them to coming up with iPayy, where they made the carrier billing platform used by them, available to all developers.
Wallets on the other hand have not gained popularity in India. Freecharge having seen a significant increase in its mobile transactions rising from 20% to 80% from Sept 2013 to Sept 2014, Founder, Kunal Shah, believes there is a huge trust deficit in India and consumers will prefer payments through means such as SBI, which has been trusted for over 100 years and through which roughly 65% of the transactions are happening, versus some of the newer payment methods. He believes wallets are for the segment of consumers which do not know how to use credit cards or net banking.”A guy who can load money using net banking and cards on a wallet, will he use that wallet to pay elsewhere? Unless he has a motivation to do that, I don’t think so,” said Kunal Shah. Looking at the example of IRCTC, in spite of the many complaints users have of the user interface, consumers overcome the friction and pay for it through digital means as there is a huge need for it. If there is a need then no friction would matter and people would pay. The motivation is high enough to pass through all the friction points. “However, if there is not enough motivation the most convenient method would be used to pay,” stipulates Kunal. For most, wallet does not account for a convenient enough method of payment.
With the decrease in technology barriers and increase in smartphone users and internet consumption, digital based payment modes will be an integral part of the digital world in the days to come. “Whether in the form of wallet, offline, online, those are things that will play out as the market progresses, (and the) regulator has a key role in that. Regulator has consistently moved forward, though entrepreneurs and investors may not like what they are doing, their programs are to safeguard the consumer. That is their intent,” said Anshoo Sharma, Principal, Lightspeed Ventures India. With a regulatory body keeping the consumers interests in mind, and newer payment methods trying to gain the trust of India, digital payment modes will soon be as seamless in India as they are in US.
Author: Priyanka Taya