Meal coupons go digital
Win-win solution for both employers and employees
How many of us have misplaced or inadvertently damaged the food coupons that we get as part of our salary? Or ended up discovering these long past the due date and rued over the fact that they cannot be used? Or have been forced to look for change while paying, as the coupon amount is not a round figure? All this will soon be a thing of the past.
The Reserve Bank of India (RBI) has done its bit by proposing to digitise meal coupons, in its draft guidelines on pre-paid instruments. Companies in this space have already started issuing meal coupons in digital formats, like cards and mobile wallets, that can be used across point-of-sale machines and on platforms like Unified Payment Interface, Bharat QR code, etc.
According to income-tax (I-T) rules, employers can give ~50 per meal to employees, which is eligible for tax exemption. Most employers have a limit of ~2,200 per month, which is the amount for two meals per day, for 22 days of the month. Until now, this was given in the form of paper coupons. These coupons are accepted at restaurants and grocery stores. But, they are supposed to be redeemed only for food and non-alcoholic beverages.
Sodexho, leader in meal coupons, introduced cards more than a year ago, while Paytm launched its Food Wallet earlier this month. Other players who offer digital options for meal coupons include Zeta and NiYO.
Employers can choose to sign up with Paytm to offer meal coupons through Food Wallet. Employees will then find the food wallet option in their Paytm passbook and will also be able to locate the closest food outlet by using a feature on the app. This wallet can be used at office cafeterias and at other physical and online stores that accept Paytm.
Users can either automate payment for food from the wallet or the app will give them the option while making the payment.
Benefits: The biggest advantage of using coupons in digital mode is that employers can instantly transfer money to food wallets of employees based anywhere in the country, without the hassles of procuring, handling and distributing bulky coupons and cards, says Kiran Vasireddy, senior vice-president, Paytm. “A lot of times, eating at a restaurant might be an impulse decision. At such a time, if you don’t have the coupon or card with you, you will not be able to use it. But you always have your mobile with you and can pay using the mobile wallet,” he says.
If there is any balance in the Food Wallet, it remains there till the user exhausts it, unlike a paper coupon which has an expiry date. In the latter, there is always a chance that unused coupons may go waste.
But you cannot transfer the balance from Food Wallet to your Paytm wallet because this is a taxsaving instrument, which is in accordance with I-T regulations, points out Vasireddy. The balance will remain in the food wallet and you can consume it whenever you buy food or grocery.
In the case of digital forms, there is no delay between distribution and spending, says Bhavin Turakhia, co-founder and chief executive officer (CEO), Zeta, which offers a multi-wallet card for employee benefits, including meal coupons. “In the case of paper vouchers, the employer has to physically get the coupons, then distribute to all employees. There could be a delay. In digital mode, this can be done within a few seconds, as the only thing to do is to load the money in the card,” he says.
Tax compliance is the other big benefit. When a card or wallet is used, money from the non-food wallet will not be spent for any other purpose.
Customisation: It is also possible for employers to offer customisation using digital modes, which paper coupons do not permit. For instance, some employers want the card to only work at the office canteen or a particular store. Or to work only during particular hours, says Vinay Bagri, cofounder and CEO, NiYO. In such a case, if the employee swipes the card during those hours, money will come from the food wallet. At any other time during the day or for any purpose other than food, the money will come from the general wallet.
NiYO offers a card with multiple wallets for various tax benefits that are allowed according to I-T rules. These include wallets for reimbursement of food, fuel, gift, medical, leave travel allowance, etc. The card has a PIN and can be swiped like a debit or credit card.
“As an employee, you are not bothered about when the card will work or not. You just load some money in the general wallet and keep swiping the card. It will automatically run the tax rules.
Wherever the tax rules are applicable, the money will come from that particular wallet,” says Bagri.
Zeta also offers multiple wallets on a card, mobile wallet as well as a near-field communication (NFC) tag. “The vast majority of spends today take place on the card, followed by the wallet and the NFC tag. Most employers we have tied up with offer the wallet and the card. The NFC tag is used if the company has a cashless cafeteria,’’ says Turakhia.
Some other reimbursements that can be offered through cards are mobile bills and gadgets.
Sodexho also has a card that can be linked to the mobile and used like a wallet, says Suvodeep Das, vice-president-marketing at Sodexho. A wallet is nothing but a virtual account. Whenever a company signs up, each employee is given an account on Sodexho’s back-end, which is linked to the card. “The card is the physical form factor. The moment you link the card to your mobile phone, it becomes a wallet because at the back-end there is a source and an account,” he explains.