Paytm's payments bank is delayed due to regulatory issues: CEO
Paytm on Wednesday launched a POS app facility which will allow offline merchants registered with its wallets to accept all major debit and credit cards. Even as the company calls it a POS system, it is more like an extension of its third party payment network for offline merchant.
Paytm on Wednesday launched a POS app facility which will allow offline merchants registered with its wallets to accept all major debit and credit cards. Even as the company calls it a POS system, it is more like an extension of its third party payment network for offline merchant. This may however, go a long way in bringing over thousands of customers who still do not use a wallet but do own debit or credit cards.
In an interaction with Moneycontrol.com's Priyanka Sahay, Vijay Shekhar Sharma, the chief executive officer of Paytm, shares what triggered this move, his thoughts on demonetisation and the need for India to switch to digital payments.
Q: What is your take on demonetisation? Given the problems people are facing do you think government could have executed it in a better fashion?
A: There is no doubt about it that there has been tremendous amount of pain around and anything of that grandeur is inevitably supposed to bring pain. It takes a brave person to still take a call. We should try solving the problem that we are seeing. If you notice, we did not have an obligation to launch a third party payment network on Paytm app. But we are launching this because we believe this is an opportunity for this country.
Q: Since with this move even non-wallet users will be able to make transactions, don't you think, this will lower down the popularity of e-wallets among consumers?
A: That is what I am saying. This is the time to come up to the occasion and solve the problem for the country not only think of yourself.
Q: What triggered this move?
A: We thought, how can we make these queues small? How as a technology startup we can contribute to make cashless faster. I was going to a Coldplay show at Utah and I had some leg injury and couldn't walk. So, I took a pedal rickshaw and that guy took a payment using card. I spoke to my team that why don't we do that on our app. This was in September. Today, Paytm is useful for 15 crore people. The thought was to, how could we make it useful also for 74 crore people (card users in India).
As a leader in the payments industry, it is our obligation and duty to get all option of digital payments. We do not want to build a close system but an open system which invites everybody. Today, we just opened it for Visa and Master Card, tomorrow we are opening it for UPI. We effectively could be the biggest payment network for UPI in the country.
Q: You mentioned that going forward, Paytm may come up with a device also. Will it be a POS device?
A: This will be basis the reaction that we will see. If merchants, start to accept this (app-based POS), we may... not that we are currently bringing in. Let’s say, the data entry is happening using a key pad. We can allow a dongle where users can swipe a card and that data gets captured.
Q: Many merchants never used digital payments due to the fear of being transparent about their income. How do you think, Paytm will be able to convince them?
A: Please give up earning for yourself. Give it to the country. We all want a lot from this country and when it comes to giving the minimum that is everyone else is giving (people don't do it)... it is not unfairly asked from you. It is just what everyone else is giving. We all who get salaries are the poor ones who give (tax) and the other ones are the ones cribbing about it the most. If by doing this India widens its tax net, it will be good for this country any which ways.
Q: Why has payments bank being delayed and by when can we expect that?
A: You can only underestimate the amount of interactions a regulator needs. It is not on us. It is that the regulator has to give us a consent.
Q: Airtel has launched its payments bank with an interest rate of 7.25 percent per annum on savings accounts deposits. Do you think Paytm's payments bank would be offering interest at par with that?
A: The most important thing I tell my peers is never tell me what my competition does. If we are defined by competition, we have a problem in our business. If we are defining what we believe the market needs, we have an asset in our business.
Q: You were sitting in a conference when the first demonetisation announcement happened. What was your first reaction?
A: The team was listening and the team told me what all is happening. The biggest thing, we discussed quickly on WhatsApp group was, let us start working on – first we thought how to train consumers and then we found out it is not just about training consumers but about how to train merchants. Later, we went on to the third level where it is not just merchants and consumers, it is everyone has to reach everyone. So that is how three phases in three weeks, we have gone. We also quickly brainstormed what kind of issues our app has. For example, language was very clear gap.