United States tech giant Google rolled out its first Asian payment app in India, trying to cash in on the small but growing digital payment sector in the South Asian country where cash still rules.
Finance Minister Arun Jaitley launched the app, called Tez, which means fast in Hindi. He said Google chief executive Sundar Pichai had first pitched the idea during a meeting in January this year.
Google, which has introduced the app in seven Indian languages including Hindi and Tamil, has tied up with four Indian banks and is working with the government-backed Unified Payment Interface. UPI is a payment system that is regulated by the Reserve Bank of India and allows transfers between two bank accounts through a mobile phone.
Tez users can pay merchants or others straight from their bank accounts, with Google noting that users would not lose out on bank interest through this payment method or share any personal data. The app links to Gmail accounts.
"Tez has been made for India and will make payments as simple as cash," said Mr Caesar Sengupta, vice-president of Google's Next Billion Users division.
"The switch from cash to digital is going to happen (in India). It is a matter of time ... this is an area India will leapfrog over markets in the US and the West," he added.
A media report said the company had trademarked the name in Indonesia and the Philippines.
CALL TO BOOST CYBER SECURITY
When we look at digital payments, cyber security is the No. 1 concern in terms of robustness of digital payment apps and ensuring protection of data... We don't have dedicated rules for digital payment providers.
CYBER LAW EXPERT PAVAN DUGGAL, noting that the government has to strengthen laws to protect users.
Choices galore for Indians
Indians have a growing number of online payment choices. Over the past 10 month, firms and banks have launched their own payment apps and eWallets while the government, too, has come up with different payment methods.
A government-backed payment method called Bharat QR code was launched earlier this year in which people can pay using a smartphone app to scan a machine-readable code. Another is BHIM Aadhaar Pay which uses Aadhaar - the world's largest biometric ID system - in which customers can pay from their bank account using their fingerprint as the password.
Telecom firm Airtel launched its own cellphone- aided banking services, while Paytm, among half a dozen eWallets, launched banking facilities allowing users to open savings accounts and use their phone to deposit and withdraw cash. Messenger app Hike, in partnership with Yes Bank, has launched an eWallet. Domestic bank HDFC has a multi-bank mobile payment app that links directly to users' bank accounts.
Indian consumers - the majority of whom remain distrustful of online payments or do not have access to them - can turn to a flurry of online payment methods after the removal of 500- and 1,000-rupee banknotes from circulation on Nov 8 last year. The move, which the government said was aimed at curbing corruption and terror financing, led to a cash crunch with 86 per cent of the cash taken out of circulation before new high-value banknotes were printed.
The cash shortage forced Indians to use eWallets like Paytm or other online payment methods to pay for groceries and other essentials.
Experts said Tez would further increase competition in the digital space with Facebook's messaging service WhatsApp in discussions with the National Payments Corporation of India, which runs UPI.
"With an installed base of over 300 million smartphone users in the country and with almost 100 million new users connecting to the Internet every year, entering into the payment space is a lucrative segment for certain businesses, especially for the ones having millions of users on their ecosystem already," said Mr Parv Sharma, a research associate with Counterpoint Research.
According to a report from Google and Boston Consulting Group, digital payments are expected to reach US$500 billion (S$673 billion) annually by 2020. India has a growing middle class with 50 per cent of the population under 25 and increasingly tech savvy.
Yet, growth of the online space has also triggered fears about the safety of such transactions in India, which does not have any specific rules or laws for digital payments.
Cyber law expert Pavan Duggal said the government has to strengthen laws to protect users.
"When we look at digital payments, cyber security is the No. 1 concern in terms of robustness of digital payment apps and ensuring protection of data... We don't have dedicated rules for digital payment providers," said Mr Duggal.