RIP , CREDIT CARD ?

Yes , if we are to believe Bill Gates

During his recent visit to India , he is supposed to have said so much !

Source : TOI / 19 Nov 2016 

Interview with Surojit Gupta :

Quote :

The US is not as digitized as Kenya is or Tanzania . I use credit card sometime. I use the cell phone quite a bit now but it's still a mixed thing and you know it is expected that the plastic card will go away in US in the next 4-5 years and then it will be just your cell phone

Source : Business Line / 18 Nov 2016

Quote :

According to sources privy to the meeting, Gates told Minister of IT , Ravi Shankar Prasad that  smart phones are better instruments than plastic cards and payment banks are more sustainable approach for financial transactions

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Now Bill Gates knows that , in USA , credit / debit cards have been around for ages and now number close to 1500 million ( roughly , 5.5 per person ) !

As against this , in India , credit / debit cards made their appearance some 20 years back and now number 723 million ( includes 697 million DEBIT cards, of which , 300 million are issued by National Payments Corporation of India , along with 254 million Jan Dhan Accounts )

This works out to roughly 0.55 card per person !

DISADVANTAGES  OF  PLASTIC  CARDS :

#  They need Card Readers ( Card Swiping machines  /  Point of Sales machines )

    In India, currently , there are only 1.44 million machines ; and 100 million retail shops !

    And , roughly 1 machine for 900 persons , as against 1 machine for 25 persons in

    China !

#  Usage of Credit cards is quite costly !

    Besides " Entry Fee " and " Annual Renewal Charges " , you need to pay an interest rate

    of approx 16 % on credit amount used. If you fail to pay in time, this can go up to 30%

    In many cases , this has ranged between 36 % to 48 % !

    As per RBI , as of end May 2016 , credit card outstanding has gone up to Rs 42,000 crore

#  There have been a large no of cases where hackers have stolen PIN and fraudulently

    used the card details to make purchases , without the knowledge of the owners . Then

    there have been many cases of " duplication " of cards when handed to a shop

#  Since dozens of Banks have issued hundreds of types / varieties of cards for all kinds of

    " purposes " , it is very difficult for a common man to select the most appropriate one

#   Procedure for getting a card issued in your name is lengthy, requiring many documents 

ADVANTAGES  OF  MOBILE PAYMENT APPS :

#  Of the total mobile phone population in India , ( around 1033 million ) , smart phones

    constitute 240 million . By 2020 , all mobile phones in India are expected to be smart !

#  Mobile Wallet apps ( Paytm  /  Oxigen  /  itzCASH  /  Paylo  / FreeCharge etc ) , have

    actually transformed a smart phone into a Card Reader / Point of Sale machine !

    They are saying : " Honey!  We shrunk the Machine to fit in your pocket ! "

#   UPI ( Universal Payment Gateway ) does not require you to give any of your bank a/c

     details to anyone !

     Just create your own unique " signature " and start transferring funds between

     participating banks . Soon , it will cover ALL banks and enable payments to

     sellers as well  !

    

#   Downloading of most Mobile Wallet apps is very simple and takes 2 / 3 " touches " on

     your mobile screen !

     Last week , CEO of Paytm said in a TV interview :

    " Nearly ONE MILLION persons have started downloading our app , EVERY DAY , since

     announcement of demonetization . We expect to serve 500 million users by end 2018 "

#   Hardly a day passes without some or other Start Up , releasing a Mobile App to deliver

     hundreds of Financial Products / Services ( including which ATM is full of notes ! )

     Do not be surprised , if P2Plending happens through mobiles in one year !

#   Mobiles have almost become THE DEVICE for all Online purchases , whether of goods or

     of services . In 2 years , entire E- Commerce will be through mobiles !

#   Through IndiaStack , expect entire E -Governance ( including ALL payment of taxes ) ,

     to take place through Mobile phones

     Same will also be true of delivery of all government services to citizens AND redressal of

     all grievances /complaints by citizens

#   A smart phone costing Rs 5,000 can do a hundred thing ( other than phoning and

     Video talking ), whereas a Point of Sale machine costing the same , can just do ONE

     THING ! 

 

#   And when high denomination notes get embedded with RFID chips ( embracingthe

     inevitable ), it will be a Mobile App (  Fak - e - Mon  ) , which will spell :

     "  RIP , CREDIT / DEBIT cards " !

If you find it difficult to believe Bill Gates , ask Sundar Pichai /  Satya Nadela / Nandan Nilekani / Mark Zukerberg  etc

They will tell us :

" India has the golden opportunity to overtake USA , by skipping the Jurassic Age of PLASTIC CARDS "

About time , plastic card issuers ( and manufacturers of PoS machines ) re-invented themselves  !

If they don't make themselves obsolete , someone else will  !

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22  Nov  2016

www.hemenparekh.in / blogs