First there was Paytm; then came the United Payment Interface (UPI); the BHIM app; BharatQR and now Samsung Pay. As the Indian government continues to try and push consumers away from cash and towards digital payments, the number of payment options available is multiplying even though there is scant evidence of a dramatic shift away from cash.
On Wednesday, Samsung launched its globally popular digital payment option in India - Samsung Pay. What differentiates Samsung Pay from other digital payment options is its claim that customers can pay by, literally, just holding up their phones at a cash register. Samsung Pay does this by using the Near Field Communication (NFC) and Magnetic Secure Transmission (MST) technology. Both technologies allow a customer to load the details of her or his credit card or debit card into the phone. The phone can then make a payment by just being in physical proximity with a device enabled to accept these technologies. Apart from Samsung, Apple Pay and Android Pay also use similar technologies for their payment systems.
In India, Samsung Pay will be compatible with UPI and Paytm, said Asim Warsi, Senior Vice-president, Product Planning Team at Samsung at a launch event in Delhi on Tuesday. The company has also partnered with Visa, Master Card, American Express, Axis Bank, HDFC Bank, ICICI Bank, SBI Card and Standard Chartered Bank.
Samsung Pay will not levy any charges on transactions, Warsi said while clarifying that usual levies from banks on digital transactions will stand.
Payments upto Rs 2000 can go through directly, while a PIN number will be needed for transactions above that, Rajiv Anand, executive director at Axis Bank told BloombergQuint.
Rajiv Anand, Executive Director, Axis Bank (Samsung Pay) It doesn’t really change the market fundamentally in any manner but increases the ease of transacting. You can now store your debit and credit cards inside Samsung Pay and make payments from the phone itself. All you need to do is just point the Samsung phone close to the PoS terminal. You can also create a handle with UPI and I can link any bank account. All existing PoS machines are MST enabled so there’s no change.
A multitude of digital payment options have been launched since demonetisation was announced on November 8. The currency replacement exercise led to a temporary cash crunch, which pushed customers towards digital payment options. Mobile wallet services like Paytm saw a sharp jump in usage in the months of November and December. As cash has returned, usage of digital payments have come off its highs even though it remains above the levels seen before demonetisation.
Data from the Reserve Bank of India shows that the value of payments in February stood at Rs 92.6 lakh crore, having slipped from a high of Rs 104 lakh crore in December. Until March 19, the value of digital payments stood at Rs 73.54 lakh crore, shows the data.
Reserve Bank Of India White Paper On Demonetisation (March 10) The catalytic push from demonetisation hastened migration towards digital payments in November and December 2016. However, ease in availability of cash by progressive remonetisation impacted the pace of growth of digitalisation in February 2017. Further efforts are essential to enhance the use of digital payment going forward.
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