Wednesday, 7 December 2016

Conspiracy of the Cards ?

In India , there are approx 73 crore Plastic cards in use , out of which , some 69 crore are Debit cards ( including RuPay cards )

90 % of the Debit cards are used for withdrawing cash from ATM

Of course , both type of cards can be used for purchases, by swiping on Card Swipe machines or Point of Sales ( PoS ) machines, of which , we have some 1.44 million in current use

To encourage non-cash transactions , NDA government , yesterday asked banks to order some 1 million ( 10 lakh ) card swipe machines and ensure that these are commissioned by end March 2017 ( next 100 days ? )

At an average price of Rs 10,000 each , this order will cost Rs 1,000 crore !

Even assuming that banks have no problem in respect of incurring such expenditure , there is just no way , companies manufacturing these machines can manage to produce 10,000 machines EVERY DAY , for the next 100 days ( when their current rate of production is barely 10,000 machines PER MONTH ) !

May be , they will manage to deliver in 300 days !

But that is not the issue .

The issue is :

Someone in the NDA government is working at " cross purpose " with the government's avowed goal to make AEPS ( Aadhar Enabled  Payment System ) integrated UPI mobile wallet , as THE FOUNDATION of going Cash Less ( or Less Cash )

This was stated by none other than Shri Amitabh Kant , CEO - NITI Aayog , 4 days back

He is working double-time to launch UPI based ( AEPS integrated ) mobile wallet by end of this month , as an ANSWER to mobile wallets of Paytm / FreeCharge / Mobiquick / PayU / ItzCash etc

No one knows it better than Shri Kant that the illiterate Indians in rural areas find it VERY DIFFICULT to use Credit / Debit cards , what with the accompanying complicated process , requiring remembering / typing of PIN and Passwords and changing now and then

In my earlier blog / email , I have suggested that UPI based mobile wallet be made UTTERLY SIMPLE , where , the Buyer and the Seller , only need to look into the smart phone camera ( for respective bio-metric identifications ) , then just SPEAK ( in their language of choice ) , their respective Aadhar Numbers and the PAYMENT AMOUNT

That's all !

It is time we leapfrog the Jurassic Age of Credit / Debit cards and straight away jump to the age of " Speech Enabled Mobile Wallets " , much in the way rural Indians bypassed the " Age of Landlines " and jumped to " Age of Mobiles "

Following is another example of someone / somewhere , working at " Cross Purpose "

A report in Hindustan Times ( 07 Dec 2016 ) says following , with regard to the forthcoming Union Budget :


INCENTIVES  are likely to merchants promoting use of PLASTIC money and TAX BENEFITS could be offered to those making electronic payments

" We will put in place, several measures to push the use of DEBIT and CREDIT cards and also encourage digital payments " ... a finance ministry official told HT

The ministry could also come out with a Pradhan Mantri Jan Dhan Yojana-like scheme to spread the use of DEBIT cards , especially among the RURAL and SEMI-URBAN areas

Merchants , especially those running small businesses , would be encouraged to acquire PoS ( point of sale ) machines to facilitate payments 


Threatened with a certain " obsolescence " within next 2 / 3 years , at the hands of the privately branded Mobile Wallets as also, the soon to be launched , UPI / AEPS linked ( and Speech based ) Mobile Wallet , it is not surprising that the existing Card Issuing companies are working overtime to convince the Government :

#  To grant some " Incentives " to MERCHANTS , who accept card-based payments
    through use of Card Readers

#  To grant some " Tax Benefits " to those making electronic payments

I am all for granting such " Incentives " and such " Tax Benefits " , but I urge the government to do so only in respect of BUYERS and SELLERS , using UPI / AEPS based Mobile Wallets , and NOT to users of CREDIT / DEBIT card

My argument is simple :

If Government extends these Incentives / Benefits to Card Users , then UPI / AEPS based mobile wallet will never take off !

No competition is precisely what those Card Issuing companies want !

For them , such budget announcements , would be " Manna from the Heaven " !

It would enable them to survive , riding piggy-back on government incentives ( - nothing more than a " life support system " for a terminally ill patient , who should be allowed a dignified EUTHANESIA ! )

Please remember ,

A UPI / AEPS integrated mobile wallet ( really , a mobile app ) can be easily configured for following functionalities ( apart from SPEECH and TRANSLATION ) :

#  Instant transmission of " Transaction Data " to servers of IT / ED / anyone else

#  Co-relation of total transaction values for a accounting year with IT return filed by a

#  Deduction of GST and depositing into appropriate accounts of Central / State

#  Crediting into the Jan Dhan accounts of the BUYERS and the SELLERS , those
    INCENTIVES / TAX BENEFITS ( expected to be announced in forthcoming budget )

#  As suggested by me earlier, crediting a small percentage of GST amount into,

    *   EPF account of the BUYER ( if he already has one )

    *   PPF account of the BUYER ( to be created automatically , by Mobile App )

    We have a work force of some 486 million , out of which only 30 million are working in
    the Organized Sector, with balance 456 million in Unorganized Sector

    I believe most of these 456 million , do not have any EPF / PPF account

   By implementing my suggestion, we will ensure that our entire work force gets covered
   by a POST RETIREMENT SOCIAL SECURITY , without imposing any big financial burden on
   the government

   In itself , this suggestion would INCENTIVIZE all buyers ( no matter , how small a
  purchase value ) , to effect payment ONLY through UPI / AEPS mobile wallet !

  With every purchase made , using his UPI / AEPS mobile app , his EPF / PPF , keeps
  growing  !

  And the interest earned on PPF is TAX FREE !


*  All mobile wallets put together , are expected to grow from current 20 crore to 65 crore
   by 2020 ( 3 times )  , and mobile wallet based transactions will go up 5 times !

*  One million new e-Wallet users are joining EVERY DAY , since 09 Nov !

*  72 % of internet accessed in India, happens on Smart phones ( against world ave of 50
    % )

*  On Sept 29  2016 , RBI had issued a circular stating that Aadhar-enabled PoS terminals
   were to be mandatorily installed by January 2017

   Yesterday , RBI deferred this implementation to June 2017 , since " the capacity to
   produce such machines is scarce "

   Manish Patel , founder of Mswipe ( which deploys mobile PoS terminals ) says :

   "  There is no clarity as to how the transaction will flow . Will the customer need to swipe
   his card or punch in the Aadhar number ?

   Or , will biometrics act as the second factor of authentication ?

   Unless these intricacies are cleared, PoS manufacturers cannot develop Aadhar-enabled
   PoS machines within the deadline "

Dear Shri Kant :

Please help the CARDS fade gently into the night !


08  Dec  2016 / blogs

No comments:

Post a Comment