An Indian company, Trupay, is creating a home-grown alternative to Visa and MasterCard, allowing banks to do away with the transaction surcharge and longer settlement periods implemented by such payments networks.
On the customer end, the company’s app does away with the need for a one-time password or the constant topping up of online wallets.
“Our idea is to work at the bottom layer, directly with banks, because with every additional layer in the payment process, there is a cost added to the transaction,” Vivek Lohcheb, co-founder of Trupay, said in an interview. “This cost is borne by the customer, even though he doesn’t realise it. It is integrated into the price of the product, for example, a credit card.”
The idea is that, by connecting banks to each other, the app can do away with the need for other conduits such as MasterCard and Visa, or payment gateways and online wallets.
“What MasterCard and Visa do is they create a common communication language between banks, becoming an intermediary between them,” Mr Lohcheb explained. “We do not become an intermediary. We enable both the banks to talk to each other using an architecture we have created, but at no point does the money flow through us.”
Payment networks like Visa and Mastercard charge commissions for the privilege of routing transactions through them, and they also include a settlement period. “The money leaves the customer’s account immediately, but the merchant gets the money a day or two later,” Mr Lohcheb said. “So there is that float money that is lying with them, and with the coming of payment gateways, this settlement period increased.”
“We integrate with banks directly and remove all these intermediaries, including Visa and Mastercard, and thus remove any such settlement period,” he added. “All transactions through us are instant.”
The app, available on both Android and iOS, rides on the Unified Payment Interface (UPI) created by the Reserve Bank of India for banks, and uses the central bank-assisted National Payments Corporation of India (NPCI), which has a database of all bank accounts and the phone number and Aadhaar numbers they are linked to. So far 21 banks are on UPI.
“The app will fetch all my accounts that are linked to the phone number,” Mr Lohcheb said, demonstrating the app’s working in real-time on his phone. “You don’t need to add any details yourself.”
Using the app, a person or merchant can send a payment request to another person or merchant by simply entering their phone number. The payer can either approve or decline the request. Once approved, the payer is prompted to enter an m-pin, a password that they created at the time of registration, and the money is transferred directly from their linked bank account to the receiver’s account.
And, since the transactions are happening directly between bank accounts, they are recorded on the bank statements of both the payer and the receiver. At the moment, there is a limit of Rs 1 lakh per transaction and five transactions per day, a much higher limit than the online wallets give.
“We used to use one-time passwords (OTP), instead of an m-pin,” Mr Lohcheb said. “But OTP has a high failure rate. Either the bank can have server issues, or your phone can have, or sometimes you enter the password incorrectly. And many times, if there is a failure, then people don’t come back again. OTP failure is at about 20-25 per cent.”
The only time that the Trupay app needs the internet is at the time of entering the m-pin, which can be done over slow internet connections as well, Mr Lohcheb said.
Since its launch on September 1, the UPI-based version of the app has seen transactions worth Rs 50 crore already, with 150,000 people having downloaded the app, according to Mr Lohcheb, who added that 10 per cent of these transactions are of people making payments for utilities like electricity and water.
“The use of this app is not an urban phenomenon,” the company’s co-founder said. “65 per cent of our customers are coming from Tier-3 and Tier-4 areas. It is those customers who are feeling the pain of not having any option like this. Wallets are not there. They have bank accounts, but can’t use it conveniently. They have to go to the bank branches, and branches themselves are not that accessible.”
Another important factor for customers is that this app gives you control over transactions.
“For example, Uber or Ola deduct money from your online wallet automatically at the end of a trip,” Mr Lohcheb explained. “If you have a problem with the bill, then you have to fill in your feedback later, once the money has already left your wallet. Or, they might levy a cancellation charge that you want to dispute. But that charge does not need your authorisation. Here, no payment can be made without your authorisation, and you don’t have to keep topping up your wallets.”
The next step for the company, according to its co-founder, involves tying up with kirana stores, restaurants, bars, RWA stores, cab aggregators, etc.
“Kirana stores and local shops often have a concept of udhaar (credit) and so, using the app, they can keep a track of such instances and send the customer a consolidated amount at the end of a week or fortnight,” Mr Lohcheb said.
