Replicate the RuPay model

RuPay, conceived and launched by National Payments Corporation of India (NPCI) eight years ago, has done well for itself and the nation with a 33 per cent share of the card transactions in India. It is in fact an example of atmanirbhartha (self-dependence) much before Prime Minister Narendra Modi gave a clarion call to the nation to embrace local products and services in the troubled coronavirus times.

RuPay’s attraction is its robustness, low transaction charges — 23 per cent less than Master and Visa cards — and acceptance internationally despite the US whining that it is an instance of protectionism. From the nation’s point of view, RuPay has stemmed to a large extent the financial haemorrhage on account of foreign exchange outgo besides ensuring data protection what with RuPay’s server rooted firmly in India.

Why can’t an encore of the RuPay initiative be done on the mobile wallet front as well? To be sure, PhonePe, the mobile payment app has a sizeable 35 per cent market share which is just a few notches below the market share of Google Pay. Though to start with it was a YES Bank initiative, now PhonePe is a Walmart baby. It is ironical that banks are allowing their business to be chipped away by the mobile wallet apps especially the foreign pedigreed.

Stealing their thunder

Google, with its ubiquitous virtual world presence, is not only consolidating its hold but blocking other mobile payment apps like Paytm through the simple expedient of blocking them from Android Playstore. WhatsApp has a similar ubiquitous presence and could well give Google Pay a run for its money. Would Google dare to sabotage WhatsApp with a similar riposte? Be that as it may.

Coming back to the main issue, why are our banks allowing grass to grow under their feet and letting pure-play mobile app businesses steal their thunder under their very noses? Pure-play mobile wallet apps like Google Pay need the support of banks in the first place because without transfer of money through debit cards or through Net banking, mobile wallets simply would be a non-starter.

One has to start and keep replenishing such wallets through online transfer from their bank accounts. It is sad that SBI developed cold feet and shut down its mobile wallet Buddy that had ironically MasterCard as its service providing partner. Mobile wallets are no rocket science, and it should not be too challenging for our banks to expand mobile banking to go beyond balance enquiry and ordering of cheque books.

Mobile wallets are nothing but an extension of smartphones’ capability to be a virtual service provider for virtually all of one’s requirements — be it taking a snap, recording a mishap, or paying electricity bills besides chatting and speaking with the press of a few buttons. It holds the promise of rendering the purse or wallet dispensable. It also frees one of the need to carry a card for swiping.

No wonder, mobile wallets are slowly but steadily loosening the stranglehold of cards. The share of card payments in India stood at 49.36 per cent for the 12 months until January 2019, compared with 81.5 per cent in the 12 months until January 2015. The share of mobile payments has risen to 27.9 per cent compared with just 3.5 per cent four years ago.

Transactions via platforms like National Electronic Funds Transfer, Immediate Payment Services and others make up the rest of the digital payment. WhatsApp mobile payment is likely to entice a large number of WhatsApp users with its simplicity and user-friendliness. Its unique strength is the instant messaging service itself is rooted in one’s mobile number.

Indian banks need to rise to the challenge and do an encore of RuPay. They can also come on a joint platform that allows all banks to keep the last leg of banking business — payments — to be made through them instead of through a third party.

The writer is a Chennai-based chartered accountant