With a greater internet penetration, better connectivity, and increasing social media use, the hash out data protection has trapped pace in India. This has also opened the country as a lucrative marketplace for foreign companies seeking to take advantage on customer data. Especially the digital payment industry. But security issues around data protection remain a priority .
The sudden decision was taken by US Tech Giant- Google on 18 th September 2020. They said that the Indian payment application- PayTm had violated the gambling policies of the Play Store. The application is one of India’s go-to payments mode in the cashless era. It competes with Google’s own payment application, Google Pay (GPay).
Google has accused that the payment system has violated the gambling policies by upholding unregulated gambling in its application. They also said that they prohibit online casinos and other unregulated gambling apps that do sports betting in the country.
On the evening of 18th September 2020, Paytm founder Vijay Shekhar Sharma tweeted,” Paytm App is back, live on Play Store. We launched a UPI cashback campaign this morning. Our app got suspended by Google for this. India, you decide if giving cashback is gambling.”
Calling the tech giant, Google, the “judge, jury and executioner”, Sharma said his company had launched an IPL game wherein the winner earns a sticker that offers cashback. This, he said, is being equated with gambling by Google.
How does the Digital Payment Market in India Developing?
India is one of the biggest and fastest growing economies in the world and it’s powered by cash. For now, our mission has been that we will bring half a billion Indians to the mainstream of economy. Paytm founded by Vijay Shekar Sharma is India’s largest digital payments company 400 million. Indians are now using it. You can carry your phone walking through the store, scan the QR code and pay.
Paytm became popular in 2016 when India banned its two largest currency notes that was almost 90% of the country’s cash at the time. 10 million customers were signed up in less than three weeks. People were left scrambling for cash small shops and street vendors which had once only ever accepted cash signed up for Paytm.
Despite Paytm success there’s still massive room for growth. More than 90 percent of India’s transactions are still done in cash. There is a huge amount of resistance- one, consumers who are uncomfortable still using apps to pay and second, the shops sometimes are uncomfortable of using because of technologies. Sometimes they do not know why should they use it.
Now Paytm is going global with the founders taking the payments out to Japan and eventually the US and they have their eyes set beyond digital payments. Paytm has ventured into online banking retail and gaming. I totally believe when it comes to the technology age that have absolutely global benchmarks to build- product and technology.
We’ll be able to win in any geography that they want to go to but with rapid expansion and growth comes the risk of doing too much too soon. And US tech giants like Google and Facebook see India as one of their most important new frontiers.
They need to leverage and grow. They are trying a lot of things but going forward yes they should stick to a couple of things. It’s very difficult to scale if you are into a different segment. I understand that we do lot.
Why are tech giants who are not linked to ‘payments’ also pitching?
It was really interesting to know that Apple, Microsoft, Pinterest and others attended Money 2020 an annual event that brings together thousands of founders, investors and leaders in banking and financial technology to discuss the future of money.
Even companies that are not tech like Uber announced Uber money a new division that will push deeper into financial services which includes a digital wallet and upgraded debit and credit cards. If we could do it faster, we actually start to bring the idea of cash to the digital world. EBay laid out its strategy to bring its payments process in-house to better serve the platform’s merchants.
So it’s really simple- we’re just grounded in creating better experiences for our buyers and sellers and that means eBay needs to step in and control the payment experience and Facebook’s out of its field. The founders defended the company’s mission to reshape global finance with its Libra cryptocurrency. I think that they will trust us because we will provide a lot of value.
We’ll make strong commitments and we’ll be very good at sticking through these commitments for very long periods of time taking more control of the payments process can allow companies to cut costs and generate new revenue streams but pushing deeper into this space won’t be easy and few companies are doing it alone here at money 2020.
The evolution of different payment gateways:
Partnerships- they are key and thousands of participants from banks investment firms and so-called Fintechs- financial technology start-ups are ready to help facilitate that shift Amazon announced a partnership with fin tech. Alexa- the virtual assistant Apple launched its first credit card earlier this year with Goldman Sachs and MasterCard.
EBay is working with Silicon ValleyGiants and experts. As technology companies get better at deploying and managing financial services. They could represent a threat to the traditional banking system as well but that is a different topic altogether.
All other forms of credit are slowing except personal credit and now all banks are going towards it. If it Opens up to NBFCs issuing cards directly other than you there’s potential competition, there. And then there is somewhere down the line the potential of UPI being allowed to offer a credit function as Well.
UPI too allows an overdraft; it does a lot. It’s a digital debit card. The reason why UPI (Google) is so successful and that why the e-wallets (Paytm) are not doing is because with upi there is no second thought about it. These are complementary products for us and they prepare you for a much more complex product which is a credit card. At some stage in your life after you have entered upi plus credit will be a credit card.
In the year 2018, Paytm accused Gpay of Data usage and privacy issues:
Paytm had accused Google Pay of ‘sharing’ consumer data with the affiliate companies and third-party users of the tech partners for monetary gains through advertisements. Like we all know how facebook keeps its data updated through this same technique. The home-grown company had even approached the National Payments Corporation of India to probe the matter. This is often the second time Paytm is accusing another online payments platform of violating customer privacy.
Before this, Paytm CEO and founder Vijay Shekhar Sharma had accused WhatsApp Pay for killing Unified Payments Interface, and had even threatened to approach the NPCI and top authorities to deal with the “unfair leverage” that had been granted to WhatsApp.
The company has brought into the notice of the NCPI that other foreign companies may additionally be sharing customer details among group companies.
Google in its response has said it doesn’t use a person UPI transactions data for any monetisation purpose, which a standard Google account is employed for managing all Google products.
In July, the Commission fined Google a record- breaking $5 billion for violating EU antitrust rules. It said Google had abused its dominance within the mobile market with Android devices. It wasn’t the primary time Google faced an antitrust fine, and it’d not be the last.
Let’s start by trying to know what a monopoly is.
It’s the sole seller during a market. We’ve seen many famous monopolies throughout history, from Standard Oil within the 1890s to Microsoft within the 1980s.
When there’s a monopoly there is barriers to enter a market, a scarcity of competition, unfair advantages, control over prices and, often, other regulation. Here’s what happened with Standard Oil Trust within the nineteenth century.
Around 1880, the corporate controlled roughly 90% of U.S. companies . They strategised and targeted the small companies and hence took over the prices of all the ultimate consumer products. This worried regulator. By 1911 the Supreme Court decided Standard Oil had to be choppy during a landmark antitrust ruling.
So is Google trying to establish a modern-day monopoly ?
The European Commission thinks so, a minimum of in certain parts of its business. Here’s where Google came trouble with its Android OS . Android runs quite 80% of the world’s mobile devices like smartphones today. EU regulators said Google forced these device makers to pre-install Google apps like Search and Chrome, making it harder for competing apps to realize traction.
The EU ordered Google to unbundle its apps from Android devices, which it recently agreed to try to to . This wasn’t the sole time the EU hit Google for breaking antitrust rules. In 2017, regulators fined the corporate $2.7 billion for abusing its dominance within the search market.
Google’s program has around 90% of market share in Europe. the Commission said the corporate abused its dominance within the search market by giving its comparison shopping service an illegal advantage over rivals.
Let’s say I used to be trying to find a replacement pair of headphones. Google’s comparison shopping service listed a bunch of options at the highest of the page. And algorithms say that we usually click on the top search results only.
Some other ‘fights’ that Google has been a part of with competitors:
Yelp, as an example , has complained to the EU that Google unfairly promotes its own search results, by a way of manipulation of honest feedbacks from the consumers. The danger is that Google is stifling innovation and competition. One thing to note is that it’s not illegal just to be a monopoly here within the EU. It’s when monopolies abuse their power at the expense of consumers that they’re going to start to urge in trouble.
Not far before, but the Popular game Fortnite owners Epic Games also started a much more vivacious online protest on the big tech giants Apple and Google for exploiting the small companies and wanting to create monopoly and their sole power on all others. You can read the entire story in a interesting cinematic writeup here exclusively on the Indian Wire.
Here’s where it gets tricky with Google. It says it actually helps consumers by having a dominant position within the market. CEO Sundar Pichai argues Android’s OS creates more choices for consumers at a reasonable price. this is often where Google’s monopoly may be a bit different than historical examples.
Unlike products like petroleum , the services that Google provides are mostly free. It are often hard to determine how Google’s dominance is harming consumers when many people can’t imagine life without Google Maps or Search, apps that are free.
So far the European Union has taken a lead when it involves regulating big tech. the complete EU fines are still only alittle portion of Google’s overall revenue. But if more regulators around the Globe start trusting on the basis of not just reputation and power but also on the basis of compliants from smaller companies then Google might have been building an army against it.
With a greater internet penetration, better connectivity, and increasing social media use, the hash out data protection has trapped pace in India. This has also opened the country as a lucrative marketplace for foreign companies seeking to take advantage on customer data. Especially the digital payment industry. But security issues around data protection remain a priority . The Reserve Bank of India has given strict guidelines for these digital payment gateways to obey.
Ultimately, in the new payments ecosystem, the ability to collaborate closely with other value chain players – and even new industry entrants – could be one of the most defining features of a successful company. Depending on how they leverage their network effects, leading players are likely to be those who have found a way to capitalise on the abundant data that exists in distinct and disparate places along the value chain to create and own standards, and to design platforms for an improved overall customer experience.