New Delhi: Online payments firm Paytm, run by One97 Communications Pvt. Ltd, introduced Wednesday a new feature in its mobile app that will allow a merchant’s smartphone to act as a point of sale (PoS) machine, accepting payments through debit and credit cards.
As the country faces a cash crunch after the government’s demonetization move, mobile wallet firms, including Paytm, are trying different means to capture a big chunk of the market.
“India needs a very innovative mobile PoS machine, and Paytm has already been accepted by many merchants. By extending our merchant network to all other payment networks, we are enabling digital payments to a very large number of Indians,” said Vijay Shekhar Sharma, founder and chief executive officer, One97.
Currently, all debit and credit card payments are made through PoS machines provided by banks or third-party vendors such as Mswipe and Ezetap.
The sudden withdrawal of Rs500 and Rs1,000 notes has pushed businesses, especially those with small ticket sizes that rely mostly on cash payments, to swiftly add digital payment methods, including PoS machines to combat diminishing order volumes. But PoS devices involve a one-time device cost and a small fee on every transaction.
Paytm said that it aims to empower 15 million merchants across the country by giving them the capability to accept card payments through a smartphone. According to the company, there are about 75 crore debit and credit cards in India and about 55 crore bank accounts. This new feature is largely aimed at people who do have a debit card but do not necessarily have access to a smartphone.
The new vendor mobile application has an added ‘Accept Payment’ icon that helps a small merchant to let consumer key in their debit/credit card details. The feature primarily acts as a payment gateway one would come across while paying online and follows a similar authentication process. However, for security reasons, the feature will not allow a merchant to store the card details of a consumer within the app.
The merchant receives the money in his Paytm wallet for zero transaction fee, while PoS machines charge 1-2.5% transaction fee. Earlier on Wednesday, the government waived transaction charges on debit card payments until 31 December. Merchants will have a payment acceptance limit of Rs50,000 a month, as stipulated by Reserve Bank of India.
Paytm’s mobile application will accept payments through RuPay, Visa, MasterCard and Maestro payment gateways, the firm said. Paytm, which claims to have 1.5 million merchants on its platform, said that it was seeing over five million transactions daily worth annualised GMV (gross merchandising value, or cost of goods sold) of Rs30,000 crore.
Payments apps, including Paytm, FreeCharge, Mobikwik and PayU, are taking advantage of the current opportunity as they acquire customers by the hundreds through aggressive marketing and promotions around this time.