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@theswamy
Please don’t f-up, F-Up!!
#ZipDial2Twitter – how a wacky idea went mainstream!
A random email from an American with a Polish last name hit my Inbox in 2008 saying, “Dev Khare asked me to talk to you”. Purely out of intrigue and politeness to Dev, I agreed to take the call the next week. Within 30 seconds of the call, while driving in Bangalore traffic (which probably impaired my hearing), I realized I was dealing with someone special. A few months later the company made hotel reservations for a Mr. Valerie Rozycki – and she flew into Bangalore to meet the team; 3 months later joined mChek as a Head of Strategic Projects. During her tenure working with me Val focused on inclusive banking for women at the bottom of the pyramid and did a variety of pilot projects – some of which will hopefully still see the light of day someday in the future – but at all times her work ethic and sheer thoroughness made her a pleasure to have on the team – and oh BTW, did I mention she graduated from Stanford, had worked at two startups in the valley, and left a solid role at eBay to come and work with us.
A few years earlier, while I was setting up Ketera, one of the sharpest engineering leads I got to work with was a fun-loving young (THEN!) man – Amiya Pathak. He and I shared two things in common – a passion for cricket, and a passion for being partners in PingPong – so that he could never beat me. That he was an IIT-JEE #14 rank, an IIT-Kanpur Computer Science graduate was something I accidentally found out a few months later – such was his humility (THEN!). After I moved over to running mChek, he and I kept in touch and occasionally he stopped by to see if I could afford to hire him, then to mentor him on a few startup ideas etc.
Late in 2009, as Valerie & I were fighting amnesia on a late night flight back from Delhi, we suddenly had the craziest of ideas – why couldn’t a missed-call be used to trigger a simple transaction like checking your bank balance. That weekend, she came home and we worked through a concept. But as Monday came along we forgot about it and didn’t do much about it.
A couple of months later, I decided to move on from mChek and I remember chatting with Amiya on Yahoo Messenger. He asked me “what next?” and not knowing what to say I told him “Well – a friend and I have this crazy idea of doing polling using missed calls”. Given our rather unique wavelength match, his immediate idea was “That’s a GREAT idea”. We chatted a bit and then the three of us got together and started imagining what could be done – and it was clear that all three of us felt passionately about the possibilities.
Takeaway #1: Its no point keeping all your ideas top secret – you need to speak about them with trusted people.
Of course when we told people about it, we heard all the objections – Telcos won’t like it, businesses won’t pay for it, nobody is going to use it, it’s a behavioral change from consumers, how will you make money, etc. But one thing was clear to us – trying it out wasn’t too expensive or risky – and we never wanted to regret not trying.
Takeaway # 2: The cost of trying is very low – but the opportunity cost of NOT trying is way too high!
Amiya suddenly started writing code and in true Amiya-style launched the product for the IPL in under 3 weeks; we joke that he literally did it single-handedly, given he had a fracture in the other hand. In parallel we pulled out all the favors we could - we were filing patents – thanks to a friend who gave us a great deal, we accidentally bumped into someone who was building a Twilio for India and he agreed to implement what we needed, etc. etc.
Takeaway #3: When you set your mind to do something, the world conspires to make it happen for you.
Of course for the first few days, we each used to keep dialing the number and we could literally see the counter increase by 1 each time we dialed. A few months later, we stumbled upon the name ZipDial – instinctively it felt like a good name to have. We then had to procure the domain – and after a long negotiation with a domain squatter, we convinced him to let it go for $500; and so ZipDial.com came into existence.
Our first real success was in the Carribbean thanks to a good friend Arunjay who got us a deal with Pepsi. Within 30 days of existence, believe it or not, we were on Live TV for an ad from PepsiCo. We hurriedly had Val’s cousin design our logo and lo and behold, in June 2010, in a corner of the Carribbean, we had change advertising.
The 30-second video remains my favorite use of ZipDial and its here if you want to check it out.
In India we launched a live-football score service – given that the matches were in South Africa most Indians would wake up and check the score in the morning. That service was helped by Amiya’s love for football at the cost of sleep – because all we did was watch the match, update the SMS with the final score and that’s how the service ran. While the football score service was small, it showed that people were very loyal to the service – and came to depend on it – so much so that when Amiya once fell asleep and forgot to update the score, we got an irate email from a customer. To me that was the first sign that a consumer was finding enough value and it had changed their behavior.
Takeaway #4: The perfect product happens over time – don’t over-engineer early. Be careful about choosing what you need to prove at any point in time.
In parallel however we did find two very early customers who actually agreed to pay us for the service – and they still are paying customers today. I remember when companiesInn.com bought a 1800 number and paid for a 1 year subscription – was an amazing feeling indeed. What this did for us is validate that not just consumers would use it – but businesses would pay for it.
With a bit of money from family and colleagues – two of whom, Bala Parthasarathy & Shripati Acharya later became my partners at AngelPrime we launched the free cricket score service.
That of course grew crazy – every time Sachin was in the 90’s the call volume grew exponentially. We later realized there was some spam, there were people making 1000 calls per day – but we took the attitude that filtering out spam would be adding more IP to our company and worked on the solution. During one of the customer meetings Val heard a customer say, “we have no budget because our mobile marketing is all committed to this BookCricket WAP game”. Without thinking much she said “I’m sure we can build it on ZipDial”. She later called and asked– “do you know what book cricket is” – and Amiya and I both jumped up and said “of course we can build that on ZipDial”. That was perhaps our first multi-lakh rupee customer and guess what – the marketing manager probably got a promotion because, although he had less than 1000 games played on WAP and 1.2Lakh games played on ZipDial.
Takeaway #5: Be bold, be adventurous, the price of failure isn’t that high.
At some point we raised a good initial round of funding from Mumbai Angels and subsequently from Blume and other investors. But right from day zero we had the attitude that investor money has to be dealt with more carefully than our own, customers have to value our service, and the only money that matters is revenue. In other words, we must add keep creating and value. A year into ZipDial, AngelPrime was formed formally, but both my partners at AngelPrime, were actively involved in ZipDial from early days and still are people Val and Amiya turn to for advice and mentoring on tricky subjects.
Takeaway #6: Have more people worrying about your company – its always a good thing!
Probably the single-biggest moment in ZipDial’s coming of age was during the Anna Hazare Anti-Corruption movement in 2012. During that time all TV Channels were promoting various campaigns – but Times chose to augment email, Facebook, Twitter and Google with ZipDial’s missed-call facility. While all the other channels combined had less than a lakh, we had more than 5Million unique users on ZipDial – and we knew we were for real.
Takeaway #7: Despite cynicism, we knew we had a WINNER – because in at least in some situations, we would trump whatever other medium existed.
From that point on it was a case of scaling the team investing in analysis of the data and building great analytics tools, and doing all the fundamentals of running a business. Val and Amiya did a commendable job of taking the business to the next level and actually getting into commercial agreements with virtually every brand in India, expanding to other geographies, and along the way working strategically with several players including Facebook and Twitter.
Along the way the team made significant sacrifices – the number of times everyone worked till 3AM, the number of times Val was in multiple time-zones in the same day, the time she spent away from home, from her husband – whom she married 2 years into ZipDial, nothing short of a Bhaag Milkha Bhaag like movie. And yet there was a lot of fun. Every employee was wished by an email from each team member on his/her birthday with the traditional cake smearing too. Fun and hardwork were combined very effectively to build an environment where people worked hard because they were committed to the cause and to each other – not because of the immediate financial benefits.
Fast-forward to today and it’s truly a pleasure to share with the world that Twitter has acquired ZipDial. The acquisition by Twitter is also a huge event for the Indian startup eco-system – it proves that a truly Indian idea has been acquired by one of the biggest global brands because this made in India for India product, team and culture matter a great deal. I’m sure there are many more takeaways about how to build a company that Val and Amiya will someday narrate!
My congratulations, kudos and best wishes to Valerie, Amiya, their families and the entire ZipDial family as they now move to this next phase of the journey – part of a bigger global company, the $25Billion startup called Twitter! You guys have really proven to the world that Success isn’t a game of chance – it’s about taking your chances!
A Chota-ATM in every merchant's pocket!
Access to cash is seen as a key requirement of banking – and as a result, most financial inclusion initiatives have had limited success. People are rightfully paranoid with the idea that when they urgently need access to cash, they have to travel 20km to the neighboring town and eventually find an ATM machine that isn’t working. Banks of course are scaling their ATM networks as fast as they can – but the size and scope of the problem means the rate of growth is always behind the demand.
Well – no more. SBI recently announced the Chota ATM and in partnership with Ezetap has brought Chota ATM to your neighborhood Kirana shop - and what’s more – it also is a Point of Sale terminal for collecting electronic payments from any Debit or Credit card. This pocket-sized solution shown in the picture is 100% made in India by Ezetap and can easily be extended to other services.
Any legitimate business can open a zero balance current account with SBI and any Android or Windows phone or Tablet with a WiFi or data connection. For any Cash@POS transactions, the amount plus commission are settled the next day into the bank account of the merchant.
A step-by-step user experience is shown in the screenshots below.
Cash@POS is a proven solution in other parts of the world – in the US for example, any grocery store lets you pay with your card and withdraw up to $100 then and there.
RBI today allows a daily limit of Rs. 1000 per cardholder – hopefully this limit will be raised to say Rs. 5000 as the concept has recently started getting good traction.
Cash@POS solves several problems for the eco-system:
1) Shopkeepers need a safe deposit for the cash they have – and today they hoard the money and eventually take it to a bank branch for depositing it into their account.
2) For the merchant, the same terminal also becomes a Point of Sale terminal to collect card-based payments – in future these could easily be extended to true mobile payments.
3) Banks need to circulate the money and securely transport it to an ATM machine. This adds a lot of security and operational costs to the banking ecosystem.
4) ATM machines are extremely expensive – CAPEX and OPEX – and this means fewer ATM machines.
5) A trip to the ATM machine is just that – but with the Chota ATM concept there is no longer a need for that. Consumers can just go to their neighborhood shop and purchase groceries and at the time of checkout, also “purchase” some cash. Or as you exit your taxi-cab, you could pay with your debit card and also withdraw cash.
6) Banks pay a commission to retailers – essentially making this an income-generating tool too!
Last but not least Cash@POS can be a driver for financial inclusion in the country. When people know they can walk to the neighborhood store and withdraw cash, more people will be comfortable keeping cash in the bank – and over time realize they could just as easily shop and pay directly from their bank account, whether with a debit card or their mobile phone or anything else.
From a merchant’s perspective, its cash they would lock up overnight – and instead in 24 hours it earned them a commission.
As a consumer - one might ask - but is it safe? The beauty of this solution is that it is 100% certified by all the required standards and global best practices - EMV, PCI-PTS, PCI-DSS which are standards in the Payments industry. This means that the card reader and the PIN entry are exactly on par and certified as per the same standards as any other ATM.
One can very well imagine ALL shops in India turning into Chota ATM points in the next year. If you run a store or have a delivery agent and want to get this solution, email [email protected] or contact your nearest SBI branch.
The new Ezetap "Point of Service" - design we're proud of!
Ezetap today launched an integrated Point of Service - combining a Tablet, the Ezetap mPoS device, a fingerprint sensor and a printer. This now integrates all the open-architecture capabilities of a Mobile POS with the Micro-ATM functionality.
Our vision with Ezetap is simple - bring electronic transactions to the masses. Unlike companies we've been sometimes compared to - Square or iZettle - we have a much more fundamental focus, and a partnership oriented approach.
Our intent is to enable secure electronic transactions - whenever and wherever. This might involve payments or banking services or one or more of Aadhaar-enabled services for eKYC or other authentication.
One thing is clear however - the user experience must be high quality - consumers must interact with products that look and feel great. When things work - it probably matters less, but if things sometimes go wrong, a contraption with wires sticking out of them is less likely to instill confidence than something that is good looking.
Which is why, when we brought out our integrated mPOS & Micro-ATM we went the extra step to ensure that not only did we include all the required functionality, we also ensured it looks and feels like a very aspirational product.
Take a look at the photo comparison above and you be the judge - what product would YOU rather work with? Both as a merchant or as a consumer?
Do share your comments on the importance of design.
My Blogs on Aadhaar
With AADHAAR now having the support of the Narendra Modi-led NDA government, its time to freshen up your Aadhaar knowledge.
Below are a couple of blogs on the basics - facts, not opinions.
- Aadhaar 101 - understanding Aadhaar for the rest of us
- Aadhaar 102 - Aadhaar & cash transfers
Enjoy!
Why do card payments cost me 2% & why should I accept them?
As a small retailer who accepts card-based payments in India, one often asks the questions – how does this work and why does Visa charge me 2%?
Even as a consumer who had used cards, until I got into the Payment industry, I didn’t realize what a sophisticated system this is all about. The term Visa is often a pseudonym for cards – Visa, MasterCard, American Express, Diners, Discover,JCB, or the new Indian brand, RUPAY.
I thought I should explain what really happens and where does the so-called 2% really go.The examples below are for physical retailers – but the concepts are similar for Internet or Mobile Payments.
First andforemost – the rate isn’t 2%, and the majority of it doesn’t go to Visa. Both Visa & MasterCard are organizations that work through members – typically banks. Rupay is the Indian Card network that is being launched as a competitor to Visa & MasterCard. American Express, while similar in concept to the consumer, is run very differently – so some of the details may not be applicable.
These members issue cards to consumers - these may be Credit or Debit Cards (Prepaid cards are a variation of Debit Cards). Typically all members issue cards to their consumers - these are called issuing banks.
Some of thebanks may also sign up merchants – these are called acquiring banks – and often the merchants get a terminal called a Point of Sale (PoS) machine. The rate charged to the merchant is entirely governed by regulation and a negotiation between the Acquirer and the Merchant. In India the typical rates are ~1.6% for Credit Cards and between 0.75 and 1% for debit cards – the latter as per an RBI mandate. On the Internet, the rates may be higher – sometimes even as high as7%.
How does a transaction work?
When you visit a merchant and choose the pay by card option, all the merchant needs to see is whether the card is Visa/MasterCard/AMEX and soon in India, Rupay – i.e. a card that his business has been acquired for. Which bank issued the consumers card is irrelevant as long as the card has a logo that the merchant has signed up for. All card-accepting merchants typically accept Visa & MasterCard – American Express today is typically with a smaller and more exclusive set of merchants.
When the merchant swipes (or dips in case of a Chip card) the card, the PoS contacts the server of the acquiring bank which in turn routes the transaction to Visa and from there on to the issuing bank. The issuing bank validates the user and blocks the amount from the users card and sends a confirmation response to the merchant, who then lets you walk out the store. All this happens in under-30seconds typically, and the money magically makes its way into the merchant’s bank account in 24 hours.
It’s fascinating that this complex system that talks across any of 25,000 banks in the world actually works – and we now take it for granted. But needless to say a LOT of robust and scalable technology, security, policies, standardization and marketing and consumer education is required behind the scenes, in order for the transaction to work 99.99% of the time.
So where does the transaction fee go?
In reality, neither Visa nor MasterCard makes the bulk of the money. The money goes primarily to the consumer’s bank – i.e. the issuing bank. For Credit Cards this is typically ~1% although it is higher for Gold, Platinum & Signature cards. The logic for this is simple – 1% is approximately the cost of funds forthe initial credit period (30-45 days). This is typically called the “Interchange”. The remaining money is shared between Visa (or MasterCard) and the Acquiring bank and covers the cost of program management – in many cases, for large merchants, acquirers actually lose money.
In the caseof debit cards, given that the bank isn’t lending you the money, these rates are significantly lower – the upper limit on the rates are mandated in India by the Reserve Bank to be 0.75% for small value and 1% for transactions above 2000 rupees. Correspondingly the interchange is about 2/3 of the fee – this is whatgoes to the issuing bank.
Visa & MasterCard don’t make a lot per transaction – but the sheer global volume of transactions helps them add up being multi-billion dollar companies.
As a merchant, why would a merchant want to accept cards?
Granted there is a cost – but there are several benefits to merchants to accepting cards.The key benefits are security & fraud, access to consumers and access to credit.
Security & fraud – are almost never factored in by merchants – the fact is every merchant ends up getting fraudulent bills, thefts, runnerboys who don’t bring back the 1Lakh rupees they collected etc. Additionally exact change,paying 100 rupees for 95 rupees of coins and other such issues can be minimized. These problems are largely eliminated in an electronic payments world.
Access to consumers – in a day of instant gratification and impulse purchases, as a consumer, one often spends more with a card in hand.Often, one doesn’t have cash in one’s pocket – but more often than not, when you pay by card, you don’t think twice to add an extra item or two to the grocery basket, even if it wasn’t in the list. From the merchants perspective, that additional sale is itself worth the transaction fee – but many merchants do not realize this initially
Access to credit - Most retailers are forced to fund their businesses themselves – especially in India. For example, telecom recharge, issold by the distributor to the retailer on a cash/prepaid basis. The same holds for most of the goods a retailer stocks – whether from an FMCG or Pharma-company.
A recent pilot done with small Kirana stores in Bangalore (who were equipped with atablet to become more “organized”) showed that retailers bought and sold 30% more when allowed to borrow from a bank. More importantly the retailer was able to stock what he felt the market wants, rather than whatever the distributor was willing to give him credit for. For banks to lend however, they need to know that the money will come back to them – and card-based payments are a sure way to facilitate the repayment.
Consumer Financing & EMI’s
Forcredit-card customers, EMI’s are what often decides if you buy a product or don’t – or if you can buy the product you want or the product you can currently afford. This is yet another reason why, in many cases, consumers are starting to prefer cards over cash for any big-ticket high-value purchase. I had never personally used EMI’s until a couple of months ago – and now I’m hooked.
Card acceptance as a marketing tool
I talked earlier about access to consumers in the context of people who might buy despite not carrying cash etc. This is only one side of the story. The banks and card companies are truly focused on spending a lot of the money they earn into programs such as loyalty, discounts, cash-back offers, special deals etc.
For merchants the choice is simple – accept cards and do more business – or ignore them and risk staying small.
I hope the above article is an easy read – I’ve tried to not use too many technical terms which often makes it very difficult to write about and understand for someone who isn't from the industry. I'll save the details for next time around.
Would love to hear your feedback here or on Twitter theswamy
PS: I've reposted this from an earlier blog I wrote on Facebook. From now on this is my new blog page!
How HackerEarth is changing the way top jobs and developers find each other!
After 16 years of study/work in France & Silicon Valley, I moved back to India in 2003 to head up mPortal, then Ketera and later mChek. I quickly learnt that, more often than not, the role of the India head or the CEO was focused on hiring good technical talent.
In a country where services-based companies like TCS/Infy/Wipro/Cognizant and several smaller players had brought in the DNA of high-quality customer-orientation, building small teams of extremely high caliber was indeed a challenge. I've personally hired probably about 300 people for product-based engineering roles in these companies over the course of 7 years and while there is no magic formula, the fact is that product companies have to keep searching for a needle in a haystack to find the right engineers.
At mPortal (2003-2004) the formula we adopted was to get a large number of entry-level graduates from the smaller colleges and just train them till they got productive. The low salaries seemed to justify the ROI on such hires - but the downside we had was that good engineers always found better paying roles elsewhere; I always felt we ended up being a training ground.
At Ketera (2004-2006) we attempted to build a VERY high-end team. The formula was very simple - if we didn't hire them in Silicon Valley, we wouldn't hire them in Bangalore. What we found here was we had to raise and keep the bar extremely high - but in the process, after an initial barren period, we ended up really attracting very high quality talent.
The big drain on my team at Ketera was that everyone went home with a wad of 200 resumes everyday and kept pre-screening resume after resume looking for that needle in the haystack. Indeed the team productivity suffered for the first 4-6 months just because of the focus on filtering and qualifying candidates.
The strange thing in India is because of the services industry mindset, the only ting that people look at is the number of years of experience - which is a proxy for how good you are and how much salary you should make. In 2003 it was 1.4L* number of years of experience and by 2008 it was 2L * number of years of experience i.e. about $3K per year growing to $4K per year. And it was about 20-50% higher depending on which school/IIT you studied at.
I always hated this mindset - because as a product company, you really should care about the appropriateness of the skill-sets and level of expertise one has got.
In my new avatar as a seed-stage investor, I was delighted to meet Sachin Gupta & Vivek Prakash, the founders of HackerEarth. Indeed their vision and approach to technical assessments, developer engagement and hiring is going to revolutionize the way great jobs find awesome developers. By building a high-quality assessment engine that has fine-grained knowledge and relative grading of the quality of work developers can do, it can easily provide a very high quality and skill-based and expertise-based classification. And by enabling employers to also define their job descriptions in a structured manner, employers can now focus on reaching out to THE right person and rapidly create a short-list of candidates they want to interview. All three partners at AngelPrime were excited enough by the team and vision and initial successes - and we were happy to make a hefty seed-round investment in the company in February 2014. This was covered in TechCrunch, Economic Times and other leading media.
What convinced us about the team and the vision were the initial results they had. As a case in point InMobi ran a HackerEarth challenge a while back - they had 1600 people take the challenge, and of the 15 short-listed resumes that were above the bar, they actually hired 7. One might say that the 1:200 ratio still holds true - but from the perspective of the hiring manager, they only had to deal with a 1:2 ratio. Indeed most hiring managers I know would gladly interview 5-10 people to make one hire.
Its exciting to see how this community is growing rapidly - both with recruiters looking for high-quality profiles as well as the speed at which the developer community is growing. The best part here is that the best jobs find you - based on your skill sets and if you don't have the right skill set, you know what you need to do to get to the best jobs in the industry.
Kudos to the HackerEarth team for coming up with such an awesome approach.
If you're a developer and have read this far, you really need to claim your free HackerEarth profile by visiting http://www.hackerearth.com/ - its free for consumers, its engaging and oh yes, this is where the recruiters for the top jobs are searching anyways!
If you're looking to hire a developer for a high-end product oriented company, I encourage you to try out Hackerearth - it a truly exciting proposition!
Its indeed terrific to see how the industry is evolving - and technology helps improve its own future!
Toll-Free Mobile Data Services - the answer for India!
In countries like India, the past 2 years have seen an explosive boom in smart-phone penetration - in-fact more than half of all phones sold today are SmartPhones. However, despite this operators are seeing very little adoption of mobile data services - and most of the SmartPhones.
The brute-force approach of trying to get consumers to learn about mobile data and getting them to use mobile data is simply not going to happen easily. Messaging applications like WhatsApp or Hike and Facebook have been wildly successful, but there are virtually no other applications that have succeeded in these markets at scale, largely because consumers simply don't understand what is data and why they need it. Even though data isn't very expensive in these parts of the world, its the lack of education and fear of billing issues that is keeping people from leveraging the power of their smartphones.
So how does one change the status quo? One expensive way would be to try to educate everyone - and even then success is hardly guaranteed. The concept of toll-free mobile data is however an intriguing one - and in this case, application developers or even advertisers can subsidize the cost of data, and ensure that users can at least access such sponsored applications without having to go through the headache of understanding how to get a data-plan.
I hope some of the thought leaders at the various telecom operators - Airtel, Vodafone, Idea to start with - will give this serious consideration! Toll-free data can indeed make a big difference in getting users used to data - and will allow consumers to experience the richness of applications that leverage mobile data without having to explicitly figure out what mobile data is. I have little doubt that once users experience mobile data they will be interested in getting the full experience and signing up for other applications.
Toll-Free Mobile Data can be a key way for operators to monetize their data pipes. Indeed operators should make it extremely simple for 3rd parties to configure their IP addresses, and prepay based on volume. Such a move can truly accelerate the success of mobile data applications in the country!
Carrots & Sticks to reduce cash usage!
With a new government in India focusing on a transparent, honest and white economy, as a payments industry professional, I was thinking about what could be done from a policy perspective that makes it easier for honest citizens to not use cash.
The Nachiket Mor led committee's recommendations might well be the right & perfect approach - but I worry that they will still take several years to implement and have an impact. As a maverick entrepreneur and angel investor, I'm hoping for faster results - even if a bit imperfect to start with. The only objective I have in mind is to fast-track electronic payments.
Three areas need to be focused on:
1) Pervasive ability to open and load money into accounts
2) Carrots - Encourage adoption with subsidies & incentives
3) Sticks - Mandate adoption with penalties
Here is what I would do if I were running the system today:
1) Pervasive ability to open and load money into accounts
- As a consumer I should be able to walk into a retail store and open an account (just like Telcos) and deposit money into these accounts. I should be able to buy a Prepaid Card just like a Telco SIM. I should be able to deposit money the same way
- Any KYC should only be self-declaration and with a Mobile Number that is verified via an OTP.
- As a merchant I should be able to procure an acceptance device without any friction - literally buy it like a mobile phone. I should be able to link my bank account or Prepaid Card and anyone should be able to send me money
- For simplicity I am assuming a card-issuance model - and this can be made pervasive just like the telecom industry
2) Carrots - Encourage adoption with subsidies & incentives
- Consumers could be charged Rs. 100 per card - and out of that Rs. 25 can be paid to the merchant for having opened the account.
- Banks can pay out a fixed % commission (0.25%) to merchants for loading cash and for dispensing cash to consumers via their POS terminals. This prevents gaming the system on a per transaction basis.
- The cost of processing a transaction should be zero to merchant and consumer. The government must subsidize a flat 1% to the banks for this period so that the payment systems can run efficiently.
- If the system has to replace cash, then merchants need the ability to access and spend the money immediately. IMPS is a brilliant system that allows such settlement and there's no reason why within 6-12 months, all infrastructure should go to real-time instant settlement for domestic transactions.
- Give consumers a tax-rebate if they spend money electronically - for say a 5-year period. Korea did this successfully - and we can follow too. That will also incentivize more consumers to file taxes in India.
3) Sticks - Penalize the use of cash
- Make all cash transactions above Rs. 500 illegal. Eliminate the 1000 rupee note.
- At least at certain merchants like schools, jewelers, large format retail, gas stations, insurance policies, marble shops, plumbing fixtures, other high-end stores - it is ludicrous that stores that have no product below Rs. 1000 still accept cash. I can never understand why should airline counters even consider accepting cash when nothing they sell is less than 5000 rupees?
- P2P transfers between users should also be very simple and easy to do - via mobile phones.
Opinions welcome
I'm sure depending on who you are, you will argue that some of these are hard to implement - but if the government is determined to root out black money, and get the existing cash into the electronic usage, some bold, longer-term steps need to be made.
The regulators have got to relax the friction, give the right carrots and enforce the right sticks to drive the adoption required.
IMO, these suggestions will go a long way in enabling and driving the adoption of electronic payments in India.
I would love to hear your comments - please post them here and we can have an interactive discussion.
Disclaimers:
I'm writing this out of my belief in the value to the economy. I'm not an economist and do not understand the ramifications - but I'm only thinking like a simple technologist. Several of these ideas are going to appear controversial and hard to implement - I'm absolutely acknowledging both points in advance. Also as a seed-stage investor, some of my portfolio companies might benefit if some of these things happen.
THESE VIEWS ARE ENTIRELY PERSONAL!
2013 - a busy year, and promise of a more busy 2014!
Another year has gone by and 2013 was indeed a busy year for me - both at home and professionally.
I did surprise my wife with flowers (that someone else had bought) - its the first time in 22 years of marriage that I actually gave her flowers, so I'm making progress!
Unlike other years, this year did not involve a family visit to the US. But we all did manage to get together for a terrific, 2-week holiday in Europe. It was truly a one of a kind vacation - assembling all 14 and a half members of the clan in Paris and going around most of northern France, Netherlands & the UK felt terrific - we have to thank the weather gods for co-operating and making it an exceptional holiday. I have to thank my two wonderful nieces Pooja & Geetanjali for arranging this one-of-a-kind family vacation. It was great to see my nephew Sunny now a strapping young lad who's doing his PhD in Economics at the Goethe Institut in Frankfurt - here's wishing him all the best. Was amazing to have my mom, families of her 3 children and their children's families in one place!
My niece closed out the year by giving birth to her second child - a bonnie boy who is still nameless - but is doted to no end by his elder sister, the princess Reya.
My son did well in school in his 10th grade and we truly had a great time together in Europe and the UK. He turned 17 in December - wow - what a milestone! Celebrated the only way he knows.
Our annual Deepavali/Diwali party - the street party in Palm Meadows - has gone from strength to strength. More than 100 people attended this year making it an awesome event - we're truly blessed to have so many friends to share the festivities with.
In sport, Kallis' and Sachin's retirements seem like highlights - as I write this blog, we're all praying that Schumacher will recover from his horrific accident. It was sad to see Paul Walker, Farookh Sheikh and several other notables not make it to the new year.
I've tried to be a bit more regular with Yoga - and when I am, its definitely having a positive effect on my health. As I hit 50 in 2014, I hope to be more regular. A few weddings in the family made for opportunities to meet and greet and have good times with all.
My Rotary Club gave us reason for new found excitement - this year the Midnight Marathon fundraiser went to a completely new level.
I had the privilege of meeting the one and only Shri Milkha Singh, who became our brand ambassador and we had an amazing experience with State Bank of India as our new title sponsor. Its amazing what can be done when one thinks big.
I also had an opportunity to meet with Mr. Vijay Amritraj at a fundraiser in Silicon Valley - lovely to meet him too!
I'm sure there are a lot more exciting events that happened and a lot more things that went wrong and many more people to thank for things that went right. On a sombre note, my father-in-law's health hasn't headed in the right direction and its been a cause of concern. Let's hope for the best in 2014.
I still haven't bought that new car I thought I was going to buy at the start of the year - after buying cars every 2-3 years for as long as I lived in the US, its kind of strange that I have a 8 year old Toyota Innova as our only set of wheels - but I guess its age catching up with me. Soon I hope to have something new and fun.
Professionally, we saw some interesting developments across a variety of dimensions. A lot of progress and some pivots among the various startups I've been fathering with a dynamic set of entrepreneurs.
ZipDial has now really proven that the missed-call to action model can indeed become mainstream for brands to engage with consumers. What was hitherto a niche concept is today being accepted by brands, political parties and most importantly consumers as a preferred option. The company has launched its services in Sri Lanka, Bangladesh and will soon be in several other geographies
Ezetap, on a similar note, has also been establishing itself steadily in India as the leader in Mobile POS solutions. The year started with the launch with Citibank and a few leading merchants and over the course of the year the company has also gone live with State Bank of INdia, HDFC Bank, Yes Bank, DCB and is piloting in several other geographies. It also became the first (and only) company in the world to have a sub-$50 EMV Chip & PIN certified device - feels proud to say "Made in India" on the device.
SmartOwner, one of our newer companies has also made steady progress and is coming along nicely.
AngelPrime is working on a few more new and exciting investments - we're seeing an awesome collection of entrepreneurs and deals - and 2014 has a lot of excitement in store.
I got to speak at the Money2020 conference in Vegas - was amazing to see the professional manner in which events are arranged in the US. I also must thank all my colleagues from the Payments industry who showed up at the Nasscom Product Conclave this year and supported me in spreading the word on Payments products.
Uber's arrival in Bangalore has helped improve the quality of service of the cab industry - so that's a good thing. Flipkart has formally entered the Payment Gateway space. However its not clear that any new entity in India has truly broken out in 2013 - makes us wonder if there is something wrong in India or if it just takes a marathon effort to build companies! Redbus' exit was the one point of happiness for the industry - we sure need more of the same.
It probably also a year i started relying more on Twitter for anything important and less on Facebook or LinkedIn.
Here's to wishing all of you the very best in 2014 - and hope to meet many of you in the new year.
Take care
@theswamy!
My Blogs on Aadhaar - i.e. the UID project
I have written the following Blogs on Aadhaar
- Aadhaar 101 - understanding Aadhaar for the rest of us
- Aadhaar 102 - Aadhaar & cash transfers
Soon - 4G Phones at $100
Its fascinating to see the price drop in smart-phones - each generation consistently starts at $500 and quickly drops to $100. Certain segments in India have anywhere from 70-90% penetration of smart-phones - and no, they are not an affluent segment.
This article about the $100 4G phone is a good read for those interested in the next wave - this can be a catalyst for the online biometric authentication which is a key part of the Aadhaar initiative - the various debates on network speed etc. will be instantly eliminated. Granted it will take 5 years for the network to build itself out to critical mass - but we're betting here on a platform for the next 50-100 years for the country.
I would love to hear thoughts on what else you think this can enable.
My Blogs on Aadhaar
I have written the following Blogs on Aadhaar - hope you find this useful!
- Aadhaar 101 - understanding Aadhaar for the rest of us
- Aadhaar 102 - Aadhaar & cash transfers