Be-Bound M-Payments in India

India’s Bold Move Toward a Cashless Society

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A massive shift is taking place in India’s economy. Last year, the country began to “demonetize”, a decision that would affect about 1.3 billion people at once. The process began with Prime Minister Narendra Modi making all 500 and 1000 rupee notes illegal in India. Those notes represented about 85% of the money in circulation, so in a single day, all Indians had to find a way to keep living with less cash available.

A few of us from the Be-Bound team were already on location in India at the time, confident that Be-Bound could bring real added value to mobile payment solutions. For the unconnected people who were left with only m-payment solutions to keep their lives afloat: buy food, pay bills, collect salaries, Be-Bound technology could be a way to stay connected everywhere.

In a matter of days, I was on my way to meet the Be-Bound team in India.  On my stopover in Dubai, I went to a currency exchange office to get some rupees, and when I asked for rupees, the officers at the desk laughed at me. Ah…right. The demonetization process had already started even outside India. No need to ask for currencies that were now illegal!

Out Of Cash
Indians standing outside a bank, where the sign on the door reads, “Out of Cash”

When I landed in India, and I needed a taxi to get to my hotel which was in the city center. With no rupees in my wallet and an unbearably long line at the airport ATM, I was able to bargain for a ride by offering a driver US dollars. Just 10 minutes in India, and I was already facing problems due to the lack of cash.

On our drive, my taxi driver explained the situation that was unfolding in the country. He explained to me that now, new notes of 2000 rupees had been released, and everyone had the right to withdrawals: one 2000 note each day. But the reality of this meant that every person in the country had to wait at least 1 or 2 hours in line at the ATM to get their one and only ticket of the day.

After a few days in India, it was no surprise to see lines at every corner of the city. As a visitor, I saw lines at ATMs and Banks as a part of the city landscape.

Because of the lack of cash, bargaining was constant. Many places don’t have POS terminals (point of sale), so there was rarely the opportunity to pay by credit card. Often, people understood the situation and let us visit some museums for less than the set price or for free just becausewe didn’t have enough cash. But it was starting to get complicated to live without cash.

Mobile Banking in the Spotlight

With the sudden changes, mobile banking solutions had to be on point. The move by the Indian government increased the competition among companies, who needed to respond to the demand of transitioning to a cash-free society, immediately.

While people struggled to adjust, this was the dawn of glory times for mobile payment solutions. As a quick fix, QR Codes were one of the simplest solutions to the cash-crisis problem and to help jumpstart a cash-less society. We started noticing QR Codes everywhere. Increasingly, shops, taxis, or even tuk tuks had little “QR Code” stickers. Most of the time the sticker worked with the market leader Paytm, but there were several other company solutions available.

How Do QR Codes Work?

QR Codes
A QR code is placed at a grocery store counter so customers can make payments with their mobile phones.

Merchants generate a printed QR Code from a mobile wallet or mobile banking solution and then allow anyone using the same banking solution to scan this QR Code and automatically pay for their products.

But the reality was that QR codes still had to be scanned with a smartphone, and the smartphone needed a connection. This wouldn’t be a feasible option for Indians living in unconnected areas, without bank accounts, or without smartphones. For those living in villages where PoS terminals were scarce or nonexistent and paying by card was not possible, the cash shortage proved even more difficult. How could they pay for food? At the beginning of the demonitisation, some merchants started offering customers credit. In some cases, without these moves, there would have been no way to pay without cash.

In India, there are 1 Billion people still unconnected. That’s ¼ of the total number of people without connection on the planet. Going cashless in this country is a bold move to embrace a digital future. The immediate challenge is how to include the large unconnected population in this transition so that more people can enjoy the benefits, sooner.

Government Solutions

The government quickly jumped in to create revolutionary solutions. A solution called UPI (Unified Payment Interface) can be integrated by mobile bank apps to let their users make transactions between any accounts, any banks and any apps. This was the beginning of an interconnected banking system and it was interesting to see some mobile wallet apps starting to integrate this UPI solution.

In early January, the prime minister released a brand new app called BHIM. It was launched with a huge communication campaign and downloads of the app were booming. This new app was an “all-in-one” app. As opposed to mobile wallets, this app allows work with all your bank accounts from one place. Payments could be made with mobile phone number, which became a virtual banking ID. The potential with this kind of solution is incredible because it has the potential to create a totally cash free society, by allowing Indians to pay with their Aadhaar ID card (the Indian digital ID program and one of the biggest ID base on earth).  In the near future, it’s probable that people will be able to pay with fingerprints at any store. Fingerprints will be linked to Aadhaar ID numbers and this same ID number will be linked to the  BHIM application.

What about the unconnected?

While these near-term solutions sound great, the problem for the unconnected population remains a pressing issue in order to succeed with a countrywide digital transformation. That’s why Be-Bound spent a large part of January and February in India working on getting our technology deployed.

Digital evolution on this scale is demanding for both citizens and government.  Be-Bound bridges the gap in government digitalization programs; our compression technology contributes to digitalizing rural areas so that people can be connected to their apps wherever there is a phone signal, something that could be very useful in times like these.

Julien Happe
Article by Julien Happe

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