Description
The government has invested heavily on domestic payment infrastructure via central bodies and has led to launch of a domestic payment debit card while efforts for a credit card are underway. The cards have potential to lower the transaction fee for the merchants. The fee of approx. 1.3% is already proposed to be reduced to half while has the potential to come down to Euro zone level of 0.2-0.3% as the volume of transaction grows. This infra presently has low utility as banks have not shown any interest in adding new payments partner and the foreign players continue to rule the roost and consumers/merchants suffer.
Revenue Generation & Innovation
By: Amit Bhushan Date: 15
th
Jul 14
The Government is locked in tussle to raise revenues that can e used
to either !ush develo!ment or cut "scal de"cit# It is e$!lorin% &ays to
raise ne& ta$es &hich has ecome challen%in% under a lo& %ro&th
hi%h in'ation scenario &here !ulic is likely to resist ta$ation &hile
usinesses cite an already lo& demand and lo& ca!acity utili(ation#
The anks are also vary aout )*As and there+ore are likely to advise
%overnment to tread &ith care#
The scenario should e taken as challen%e to identi+y ne& &ays &hich
results in e,ciency %ains in e$!enditure and %ains in avenues to raise
revenues &ithout causin% much consternation amon%st masses# -ne
such avenue is rene&ed !ush +or ne&er sectors like Gamin% industry
&hich can e done y states# Already Goa and .ikkim have taken
e/orts &hile other tourism states may e$!lore this !ossiility#
-ther area could e to identi+y &ays to moneti(e se%ments &here
%overnment has invested heavily +or e,ciency# 0or e$am!le1 the
!ayment system# The %overnment has invested heavily on domestic
!ayment in+rastructure via central odies and has led to launch o+ a
domestic !ayment deit card &hile e/orts +or a credit card are
under&ay# The cards have !otential to lo&er the transaction +ee +or the
merchants# The +ee o+ a!!ro$# 1#23 is already !ro!osed to e reduced
to hal+ &hile has the !otential to come do&n to 4uro (one level o+ 5#67
5#23 as the volume o+ transaction %ro&s# This in+ra !resently has lo&
utility as anks have not sho&n any interest in addin% ne& !ayments
!artner and the +orei%n !layers continue to rule the roost and
consumers8merchants su/er#
The %overnment &hich has rou%ht the +ee o+ 1#23 o+ transaction
amount to 5#93 may decide to levy a ta$ o+ 5#13 to 5#63 o+ the
transaction amount o+ all credit card transaction#
nsiderin% that card
transaction in India are a!!ro$# 6551555 :r# And %ro&in% at doule
di%it1 this has !otential to raise 6557455:r and continue %ro&in% at
doule di%it# This &ill also lead to a shi+t to lo& transaction cost card
&hich means im!roved utili(ation o+ domestic in+ra rather than +orei%n
!layers# Also the card !enetration is lo&er and so the move is unlikely
to cause a mass !rotest !resently ut industry loies that have
interest in !resent system may crin%e# The continuance o+ doule di%it
%ro&th in years to come may yield a si%ni"cant amount is years to
come#
There can e many such small e/orts like develo!in% o+ Inland and
coastal &ater&ays# The in+rastructure can su!!ort chea!er lo%istic
systems includin% tourism and s!orts +acility !rovider and su!!ort in
mo!!in% ta$es and in a &ay can e sel+ "nancin%# A it hi%her ta$es on
lo& ener%y ratin% motors1 !um!s and %enerators includin%
trans!ortation e;ui!ment may !ro!el move on hi%her ener%y e,ciency
devices &hich can e sel+ "nancin% and set the direction +or innovation
as &ell#
In Indian scenario1 the !ayment system & central service !roviders
should also e encoura%ed to develo! <reverse s&i!e= +acility +or deit
card to !enetrate the !ayments market +urther# This should e allo&ed
to e used y !eo!le +or !ayment i#e# &hen they &ant to make
!ayment +rom their account >any ty!e linked to merchant machine? to
deit card holder=s account such <reverse s&i!e= should come handy#
.omethin% similar is ein% <innovated= y moile !hone industry in
con@unction &ith !ayment service !roviders and has cau%ht ankin%
industry as lackin% in innovation# .ince this has !rovisions to cost
ankin% industry its +ee income y ni!!in% in ud a yet to lossom
card industry1 there+ore time is @ust ri%ht +or anks to come u! &ith
ideas that can %ain them ne& markets# The reverse s&i!e can hel!
them !otentially enter <mundis= &here !ayments are received and
made in cash# I+ they su!!ort makin% !ayments in <card= via <reverse
s&i!e= into card holder=s account and also hel! collect money chea!ly
via normal s&i!e1 the !otential could e humon%ous# The ankin%
industry &ill need to &ork &ith domestic !ayments a%ency as &ell as
&ith %overnment to crack into the markets and !enetrate ankale
clients and transactions &ith innovative solutions# Resistin% ta$es and
insistence o+ older models may not e the ri%ht %ro&th model#
doc_842546370.doc
The government has invested heavily on domestic payment infrastructure via central bodies and has led to launch of a domestic payment debit card while efforts for a credit card are underway. The cards have potential to lower the transaction fee for the merchants. The fee of approx. 1.3% is already proposed to be reduced to half while has the potential to come down to Euro zone level of 0.2-0.3% as the volume of transaction grows. This infra presently has low utility as banks have not shown any interest in adding new payments partner and the foreign players continue to rule the roost and consumers/merchants suffer.
Revenue Generation & Innovation
By: Amit Bhushan Date: 15
th
Jul 14
The Government is locked in tussle to raise revenues that can e used
to either !ush develo!ment or cut "scal de"cit# It is e$!lorin% &ays to
raise ne& ta$es &hich has ecome challen%in% under a lo& %ro&th
hi%h in'ation scenario &here !ulic is likely to resist ta$ation &hile
usinesses cite an already lo& demand and lo& ca!acity utili(ation#
The anks are also vary aout )*As and there+ore are likely to advise
%overnment to tread &ith care#
The scenario should e taken as challen%e to identi+y ne& &ays &hich
results in e,ciency %ains in e$!enditure and %ains in avenues to raise
revenues &ithout causin% much consternation amon%st masses# -ne
such avenue is rene&ed !ush +or ne&er sectors like Gamin% industry
&hich can e done y states# Already Goa and .ikkim have taken
e/orts &hile other tourism states may e$!lore this !ossiility#
-ther area could e to identi+y &ays to moneti(e se%ments &here
%overnment has invested heavily +or e,ciency# 0or e$am!le1 the
!ayment system# The %overnment has invested heavily on domestic
!ayment in+rastructure via central odies and has led to launch o+ a
domestic !ayment deit card &hile e/orts +or a credit card are
under&ay# The cards have !otential to lo&er the transaction +ee +or the
merchants# The +ee o+ a!!ro$# 1#23 is already !ro!osed to e reduced
to hal+ &hile has the !otential to come do&n to 4uro (one level o+ 5#67
5#23 as the volume o+ transaction %ro&s# This in+ra !resently has lo&
utility as anks have not sho&n any interest in addin% ne& !ayments
!artner and the +orei%n !layers continue to rule the roost and
consumers8merchants su/er#
The %overnment &hich has rou%ht the +ee o+ 1#23 o+ transaction
amount to 5#93 may decide to levy a ta$ o+ 5#13 to 5#63 o+ the
transaction amount o+ all credit card transaction#
nsiderin% that cardtransaction in India are a!!ro$# 6551555 :r# And %ro&in% at doule
di%it1 this has !otential to raise 6557455:r and continue %ro&in% at
doule di%it# This &ill also lead to a shi+t to lo& transaction cost card
&hich means im!roved utili(ation o+ domestic in+ra rather than +orei%n
!layers# Also the card !enetration is lo&er and so the move is unlikely
to cause a mass !rotest !resently ut industry loies that have
interest in !resent system may crin%e# The continuance o+ doule di%it
%ro&th in years to come may yield a si%ni"cant amount is years to
come#
There can e many such small e/orts like develo!in% o+ Inland and
coastal &ater&ays# The in+rastructure can su!!ort chea!er lo%istic
systems includin% tourism and s!orts +acility !rovider and su!!ort in
mo!!in% ta$es and in a &ay can e sel+ "nancin%# A it hi%her ta$es on
lo& ener%y ratin% motors1 !um!s and %enerators includin%
trans!ortation e;ui!ment may !ro!el move on hi%her ener%y e,ciency
devices &hich can e sel+ "nancin% and set the direction +or innovation
as &ell#
In Indian scenario1 the !ayment system & central service !roviders
should also e encoura%ed to develo! <reverse s&i!e= +acility +or deit
card to !enetrate the !ayments market +urther# This should e allo&ed
to e used y !eo!le +or !ayment i#e# &hen they &ant to make
!ayment +rom their account >any ty!e linked to merchant machine? to
deit card holder=s account such <reverse s&i!e= should come handy#
.omethin% similar is ein% <innovated= y moile !hone industry in
con@unction &ith !ayment service !roviders and has cau%ht ankin%
industry as lackin% in innovation# .ince this has !rovisions to cost
ankin% industry its +ee income y ni!!in% in ud a yet to lossom
card industry1 there+ore time is @ust ri%ht +or anks to come u! &ith
ideas that can %ain them ne& markets# The reverse s&i!e can hel!
them !otentially enter <mundis= &here !ayments are received and
made in cash# I+ they su!!ort makin% !ayments in <card= via <reverse
s&i!e= into card holder=s account and also hel! collect money chea!ly
via normal s&i!e1 the !otential could e humon%ous# The ankin%
industry &ill need to &ork &ith domestic !ayments a%ency as &ell as
&ith %overnment to crack into the markets and !enetrate ankale
clients and transactions &ith innovative solutions# Resistin% ta$es and
insistence o+ older models may not e the ri%ht %ro&th model#
doc_842546370.doc