For Wal­let Cos, It will Pay to Adopt this Tech

New trans­fer pro­to­col to sim­plify trans­ac­tions with sin­gle in­ter­face across all sys­tems

The Economic Times - - Disruption: -

Aditi Shri­vas­tava & Mad­hav Chan­chani

Bengaluru: On­line wal­let com­pa­nies Paytm, Mo­bik­wik and FreeCharge aim to in­te­grate their ser­vices with the new elec­tronic fund trans­fer pro­to­col launched by the Na­tional Pay­ments Cor­po­ra­tion of In­dia, in a move aimed at en­sur­ing their busi­ness is not ren­dered su­per­flu­ous by this new plat­form.

The Uni­fied Pay­ments In­ter­face (UPI), which comes into ef­fect Mon­day, is a sin­gle in­ter­face across all Na­tional Pay­ments Cor­po­ra­tion of In­dia (NPCI) sys­tems, al­low­ing cus­tomers to in­stan­ta­neously trans­fer funds across dif­fer­ent banks with the use of a sin­gle iden­ti­fi­ca­tion and pass­word. Mul­ti­ple bank ac­counts can be linked to a sin­gle mo­bile banking ap­pli­ca­tion and money can be both re­ceived and re­quested through the same in­ter­face. This could weaken the case for con­sumers hav­ing to store money in mul­ti­ple elec­tronic wal­lets to pay for ser­vices such as cab rides, movie tick­ets or util­ity bills.

The dig­i­tal wal­let com­pa­nies say UPI will make it eas­ier for con­sumers to load cash onto the wal­let and at the same time, do not ex­pect the move to im­pact their busi­ness, es­pe­cially in the short term. “UPI will bring eas­ier and cost ef­fec­tive meth­ods to load money in Paytm,” said Vi­jay Shekhar Sharma, CEO, Paytm. UPI is a layer of ar­chi­tec­ture built on top of stan­dards like the Im­me­di­ate Pay­ment Ser­vice (IMPS) plat­form, which en­ables trans­ac­tions us­ing unique iden­ti­fi­ca­tion and mo­bile phone num­ber with­out shar­ing any other bank de­tails.

The ease-of-use this tech­nol­ogy of­fers is ex­pected to trans­form the way In­di­ans make dig­i­tal pay­ments. So much so, that In­dia's top on­line re­tailer Flip­kart, re­cently ac­quired UPIbased pay­ments com­pany PhonePe ear­lier this month. An­nounc­ing the ac­qui­si­tion, Binny Bansal, CEO of Flip­kart, said slow adop­tion of dig­i­tal pay­ments has been one of the big­gest hur­dles for mass adop­tion of on­line shop­ping in In­dia. “UPI has the po­ten­tial of trans­form­ing the en­tire pay­ments ecosys­tem in the coun­try,” Bansal said in a state­ment.

UPI also elim­i­nates the need to ex­change sen­si­tive in­for­ma­tion such as bank ac­count num­bers, and en­ter­ing nu­mer­ous ac­count/card de­tails and multi-level in­ter­ven­tion, dur­ing a fi­nan­cial trans­ac­tion. Wal­let com­pa­nies ex­pect this sim­pli­fied in­ter­face to of­fer clear ben­e­fits for them to build new ser­vices. “As UPI comes into be­ing we are con­fi­dent that on the rails of UPI, we will be able to en­able a faster and more secure trans­ac­tion across mer­chants,” said Govind Ra­jan, CEO of FreeCharge.

Ex­perts, how­ever, ar­gue that once widely ac­cepted across the banking


sec­tor, UPI could po­ten­tially chal­lenge the busi­ness model of mo­bile wal­lets in­clud­ing PayTm, FreeCharge and Mo­bik­wik, which have flour­ished be­cause of the con­ve­nience they of­fer. Vivek Bel­gavi, leader, fi­nan­cial ser­vice tech­nol­ogy, PwC In­dia, is of the view that a lot of mo­bile wal­let play­ers were try­ing to make the process easy, an ad­van­tage which will go away.

“This is why all the wal­let com­pa­nies have moved on to fo­cus on use case story (ac­quir­ing mer­chants) and mak­ing life eas­ier,” he said . Wal­let com­pa­nies dis­agree. “In the short term, UPI has no neg­a­tive im­pact on wal­lets, and if any­thing, it will make load­ing money eas­ier,” said Bipin Preet Singh, CEO, Mo­bik­wik. Typ­i­cally, the wide­spread use of a new pay­ment in­stru­ment hap­pens when every­one in the ecosys­tem adopts it, es­pe­cially the con­sumer. As in the case of credit cards where Visa and Mastercard fran­chises were pushed through part­ner­ships with banks.

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