Monday, September 18, 2017
The Tez app is a free download that supports person-to-person (P2P) as well as POS transactions. It leverages the Unified Payments Interface, a government-backed platform supporting ecommerce and interbank transfers that links most of the nation's banks. Google said it also plans to offer credit and debit card acceptance via Tez, although it's not clear when. The Tez app is being made available in seven Indian languages as well as in English.
"Tez works with all major Indian banks and with a vast majority of smartphones, so you can pay or get paid by almost anyone," Google said when introducing the app for the Indian market. And to sweeten the pot for merchants, Google said it will forego fees on monthly Tez transactions totaling up to 50,000 Indian Rupees (about $780).
Mobile payments have found a welcome market in India, where just a few years ago over 80 percent of the population was unbanked. Credit card penetration is meager in India and many businesses are cash only.
However, Google estimates that at least 300 million people in the nation can now access the Internet using mobile phones, and it expects that number will more than double by 2020. Boston Consulting Group projects digital payments will reach $500 billion in India by 2020, contributing 15 percent to the nation's gross domestic product. The consultancy also expects noncash transactions to exceed cash payments by 2023.
The Indian government has taken several steps in recent years to encourage adoption of digital payments. In addition to developing the Unified Payments Interface with National Payments Corporation of India, which facilitates the instant fund transfer between two bank accounts on the mobile platform and is regulated by the Reserve Bank of India, the government banned high-value currency (reportedly representing 86 percent of currency in circulation) in 2016. This effectively compelled consumers to adopt digital wallets and card payments.
The Indian Ministry of Electronics and IT said it expects the infrastructure for digital payments to grow nearly threefold this year to include almost 5 million electronic POS devices.
But Google is entering a crowded field of mobile payment providers in India that includes several U.S. competitors, and Paytm, a mobile payment firm backed by China's Alibaba Group Holding Ltd., which recently received regulatory approval to open a digital bank targeting the nation's unbanked and underbanked populations. Paytm reported that 100 million Indian consumers have downloaded its mobile wallet.
Unlike with Paytm, there's no requirement to add funds to the Tez mobile app before using; instead it links to users' bank accounts.
MoneyOnMobile Inc., formerly Calpian Inc., a Dallas-based payment processing firm, has been operating a mobile payment network in India since 2012 that allows consumers to initiate payments using SMS text messaging. Harold Montgomery, Chairman and Chief Executive Officer at MOM, said in an interview in February 2017 that MOM was being used at 325,000 merchant locations throughout India.
Mastercard and Visa also have been working with the Reserve Bank of India and several local banks on a national, interoperable mobile solution using Quick Response (QR) code technology. Tez features a new type of QR technology, Audio QR, which Google said is a proprietary technology that effects P2P payments into and out of bank accounts by transmitting ultra-sonic codes between devices.
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