Paytm on Wednesday rolled out a feature for its mobile wallet application that will allow shopkeepers to accept payments via credit cards and debit cards. The move eliminates the need for a point-of-sale (PoS) or a card swipe machine.
Currently, there are about 14.8 lakh PoS machines in the country, used by 7 lakh retailers, for about 74 crore debit and credits cards in use.
How does the system work?
Buyers need not have a Paytm account. The bill is generated by the shopkeeper, who will then pass his/her phone to the customer to enter the card details. After this, the customer will receive a one time password (like in the case of any online transaction) on his/her mobile number.
The move follows the government’s decision to withdraw old Rs. 500 and Rs. 1000 notes from circulation, which has led to severe cash crunch in the economy, forcing people to opt for digital payment methods.
- An e-wallet is a virtual wallet that allows people to store their money and use it for people-to-people transactions and make purchases. It does away with need to input personal information and serves as a platform for both offline and online purchases.
- Closed system: These are generally issued by businesses for use at their establishments only. These instruments do not permit cash withdrawal or redemption. Ola Money, Airtel Money are such payment instruments.
- Semi-closed system: These instruments are redeemable at a group of clearly identified merchant locations or establishments. These do not permit cash withdrawal or redemption by the holder. Paytm and MobiKwik are popular semi-closed systems.
- Open system: These can be used for purchase of goods and services and also permit cash withdrawal at ATMs. They are generally issued by banks.
“We just don't have enough PoS machines. With this application, we can eliminate the requirement of a physical machine with the vendor. On our new updated App, small shopkeepers and businesses can self- declare their details and give bank account details to start receiving payments instantly,” Vijay Shekhar Sharma, founder and CEO of Paytm, said.
No fee till Dec. 31
The company said merchants can accept up to Rs. 50,000 a month through the mobile PoS on the basis of a self-declaration. However, post a full registration on the platform by a Paytm employee, the cap is removed.
Paytm will allow merchants to accept all debit cards for no fee till December 31. Credit card fee, however, will be 2 per cent. Further, post December 31, merchants who transfer their money to Paytm Payments Bank — expected to be launched by then— will be able to do so without any charge.
Paytm, backed by China’s Alibaba group, said it expects 10 million ‘App PoS’ to be downloaded by the end of this week. Paytm expects the move to increase the number of merchants on its network 10-fold, from 15 lakh merchants to about 1.5 crore within a week.
