We have seen how over 99% of plastic, Internet and electronic money transactions in India by Indians are purely domestic. When will we finally get into this industry?

Sure, State Bank of India has its own credit card. As do a variety of other banks, shops, airlines, oil companies — even the Indian Railways has one. But it is not really “their” card, it is simply something called “co-branding”, which works very well for everybody concerned, especially for the payment processing companies, who get access to everything that banks or all other commercial establishments hold sacred and would normally never share so easily. 

Which are their client lists and business secrets. And a very nice way to pull the wool over our eyes, fooling us into thinking that it is our own Indian card. Something like versions of history taught telling us that the British built the railway network for the benefit of the natives — while actually the broad gauge lines were laid out largely to ensure better movements of troops and cargo — while the rest of the country got the metre and narrow gauge lines, or none at all. 

“But an India card will not work abroad.” How many times have you heard this? This statement, however, is incorrect. Just like your mobile phone service provider has tie-ups abroad now, with foreign networks falling over backwards to service the travelling Indian public, so also will interface work in the payment processing industry. Certainly, there will be resistance in the beginning — recall, for example, how difficult it was in the beginning to get the world to accept that technology made in India was not just cheaper, but often also better.

Likewise, the real fear that the established payment processing companies in the US have is that any real Indian competition will simply be far better. Because, most of that technology is already made in India. There is not a single mid-sized or large technology company in India not doing work for some element or part of this industry, so expect voices of protest from those lobbies, too — after all, why does the otherwise flag-waving NASSCOM keep so quiet about this subject? 

“This is a very complex business, and needs specialised providers.” If it was about making airplanes, one could understand. But the payment processing industry is about as complex as another processing industry, say, the jam and pickle processed food industry. The raw material is all there, available off-the-shelf or from local vendors — who have handled bigger projects like elections and railways. The technology is truly as simple as jam. The networks already exist, and increasingly are largely secure over the Internet — and can be retained within the Indian end of the Internet cloud, too. In fact, this single move can also strengthen the approach towards an ‘Indian Internet’. The customer base is of course also all there, present and accounted for and growing at a rate unseen anywhere else in the world, and will certainly move towards something that will be cheaper and better.

Only thing left is that somebody has to take the plunge — and soon. Once again, draw a parallel, how efficient and cheap the Indian telecom industry is compared to the Western world’s telecom service providers? Despite all the fuss and song and dance about bandwidth and regulatory bodies — can we imagine what things would have been like if Ma Bell and AT&T were the companies calling the shots in India?

It is not this article’s role to try and advise the Reserve Bank of India on what needs to be done. There are certainly people who know better, and who already have this on their mission statements as well as list of things to do, and are probably addressing issues in ways unknown to the general public. We can only wish them well, and hope that they also agree that we are all still loyal to our countries, and not to corporates. As the salesman from the movie Network said, “There are no countries anymore, only corporates.”

After all, in a country where it is murmured that even the present PM was allegedly branded a ‘Naxalite sympathiser’ by the Punjab Police about 30 years ago, it would be very easy to brand somebody as being ‘anti-national’ for daring to suggest something that would be portrayed as slowing down the growth in India’s economy. Which is what some segments of the payment processing and banking industry, as it exists in India, have said and continue to say today.

But, the fact remains, the sooner this is done, the better. It is not difficult to imagine a day and age when using plastic provides the end-users — merchants as well as customers — a benefit over using cash. After all, the cost of handling paper money is something that most people forget — and that benefit needs to go downstream to people not using paper money.

Which, apparently, is something not too many people have factored in as yet. Because none of us are told the true cost of printing and using paper currency in India.

Among other things, the introduction of the Goods and Service Tax (GST) is going to speed up commerce within the country like never before. Across the country, manufacturing and consuming, as well as distributing and retailing capabilities, are being notched up at a rate which is amazing and currently visible only to those actually supplying equipment and technology to them. From the motoring hat that I wear, it is now increasingly evident that the country is moving towards an amazing leap forward as far as the small truck and small
quasi-public transport sector is concerned, both of which factors (GST and transport revolution) will increase by multiples the amount of money transacted.

Another anecdotal example — a particular religious organisation, headed by a very street-smart and television-savvy leader, is relentlessly building an empire of health foods, both processed as well as fresh. In addition, a series of healthy beverages — carbonated as well as otherwise — are way ahead of the development phase. For all these, and more, the manufacturing, labelling, marketing, distribution and cash management network is coming up very rapidly. Analysis on time taken between money collected at the retail counter till the time it hits the manufacturers’ bank is on a level which even the MNCs have not matched — and the better benchmark is the Indian Railways.

The big issue here is about how long the existing payment processors (a) keep the money with them and (b) how much they charge. The thinking here is that (a) the money should be credited to their bank as soon as the sale is rung up at the retail outlet and (b) the processor should give them a small royalty amount for the privilege of doing their business and the visibility therein to their other related financial products.

Well, if large retail chains as well as small shops can now charge large MNCs not just for display space but also “technical charges” for entering products into their billing software, then this is not a far-fetched idea either. 

There is no denying the simple fact that the Indian economy and nation needs its own payment processing industry, just as it needs its own armed forces, external policies, postal systems and much more. Just because India was a comparatively late entrant to this system does not mean it has to depend on external providers for the rest of history, and pay royalties by way of transaction costs forever. In some ways, its own payment processing industry is about as important as its own armed forces — such is the nature of the business. This is overdue, if we have any self-respect as a nation, and there is no argument about this simple fact. India Card for domestic customers should have been launched yesterday.

But more importantly, if India as a nation is to stand tall amongst others, then it needs to start providing for how to take India Card international. And very soon. It is not just a question of self-respect, self-confidence, self-esteem and self-benefit as a nation. It is, simply, our due, as Indians, from our government. In the old days, people carried their national flags with them, and waved them whenever required. Now, all of us carry plastic, and we need to see more than a symbolic symbol denoting the Indian rupee when we travel.

The business model for an Indian payment processing industry is unarguable.

(This is the concluding part of the three-part series).

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