Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

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

www.hemenparekh.in / blogs