(This article was published in the Business Line print edition dated January 7, 2015)
Pay Point India, an online payment service provider, will apply to the Reserve Bank of India for a payment bank licence.
Describing the company’s product as a ‘fast moving consumer service’, Ketan Doshi, MD and CEO, said Pay Point already has a prepaid licence and a retail network. It’s also a business correspondent.“We fall in all three categories. Also, we are 100 per cent Indian origin firm, which makes it easier for us to apply,” he said.“With a turnover of Rs. 450-600 crore on an annual basis, we do about 25,000 transactions daily across all product lines.”
Started in 2008, Pay Point now has 11,000 touch-points (in the form of mom-and-pop stores, kirana stores and general stores) across the country, where consumers can walk in and make payments or buy subscriptions. It has four services — utility services that include collection of bills, Government taxes, etc; recharges of telcos and DTH services; ticket bookings of airways; and and financial services such as account opening and withdrawal. These services are provided on all three online channels — POS (point of sale terminals), web-enabled login and mobile applications.
Doshi said turning into a payment bank would give Pay Point India greater flexibility with possible cash-out, no more revenue-sharing with banks, no dependency on banks for approval to roll out services and less cost of setting up banking infrastructure due to technology among others.
Among the challenges, Doshi said payment bank cannot give credit which will limit its options. In some cases, the payment bank may be tied up with a merchant and if the merchant needs credit, it will have to migrate to a full fledged bank.“Secondly, the upper cap of Rs. 1 lakh deposit is too less. If a payment bank signs up a small kirana store at a remote location and if he has a bigger collection, it will eventually go to a big bank. This could have been relaxed to at least Rs. 2.5-3 lakh,” Doshi highlighted.