Here is the tech to forget about bills
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If you find yourself clinging to the mobile phone at the start of every month, cursing it because the ‘account credited...’ message has still not flashed, you are a salaried person.
And while you know that the reimbursements are also a part of your total monthly remuneration, you may be more forgiving about them. With all the bills that have to be accumulated, filed, logged and then submitted with the correct form to the correct person, you know that they can take longer to reach your wallet that the salary does.
Reimbursement, however, should be valued a lot more. After all, you don’t have to pay tax on it, if you spend it smartly and at the right places.
Typically, reimbursements would include your monthly phone bills, medical bills, meal vouchers and vouchers for grocery. Some companies also offer asset reimbursements, to let you buy computers and laptops.
To claim any of these reimbursements, you have to submit physical bills, along with the correct form. Your employer too has to retain these bills as proof, or evidence, to give to the income tax department should it ask for them at a later date.
When you look at how much technology has enabled other aspects of your financial life, be it insurance or the all-important transfer of salary directly to your account, reimbursements tend to look like an anachronism. But that is changing. Mint Money looks at how some of the financial technology (fintech) firms and meal voucher companies are digitising the reimbursements space, and how this can make your life easier.
How the bills fly away
Under the income tax Act, you need to provide documents as proof of expenditure, to claim reimbursements. This means, if your company is providing reimbursements, you still have to submit the bills.
Fintech companies have started using digital signatures to slightly ease the still-cumbersome, paper-based reimbursements process.
“In the old process, you had to submit a physical copy with a wet signature. But with digital signature, a soft copy is also considered a valid document. Currently, the income tax department accepts digital signatures. So, instead of a physical copy, if you provide a soft copy of the bill that is digitally signed, it is a valid document,” said Gautam Nayak, a Mumbai-based chartered accountant.
Meal voucher companies and mobile e-wallet firms such as Zeta, Udio, Mobikwik and Sodexo have either ventured into the reimbursement space or are planning to do so.
For instance, Zeta, a mobile e-wallet company, has digitised meal vouchers and medical bills. You can submit the medical bills electronically and the amount is available on a plastic card, so you can pay medical bills with it.
“Conventionally, meal vouchers are a paper-based process and involve manual checks. Also, there is a possibility of damage to the paper vouchers. Similarly, with a medical bill you have to physically store it and then submit it,” said Bhavin Turakhia, chief executive officer and co-founder, Zeta. He claims to have over 200 clients for this initiative, which include: Tata Group, Motilal Oswal, Crompton Greaves, Benetton, Samsonite, e-Clerx and 9X Media.
Transerv Pvt. Ltd, another digital payment company, has a mobile wallet called Udio, which provides medical reimbursements and meal vouchers digitally to the users.
The mobile wallet companies that offer this service allow you to use the money both through an app as well as a prepaid card.
Sodexo, one of the oldest meal voucher companies in the country, doesn’t have an e-wallet as of now. It launched meal cards in April, to replace the paper vouchers.
“Overall, the market is migrating from paper to digital. Right now we have offered this to 50 companies. The cost of printing vouchers is huge. With cards, the cost comes down,” said Rajeev Warrier, managing director, Sodexo.
By end of this September, Mobikwik is also looking to launch a reimbursement product on its e-wallet platform.
“We won’t be on the card model. All transactions will happen directly through the Mobikwik e-wallet. The company will be able to load money on the mobile platform and the employee can pay [the] bills through the e-wallet,” said Mrinal Sinha, chief operating officer, MobiKwik.
Currently, the cost of the cards is borne by the e-wallet company that issues it. A chip- or PIN-based card typically costs Rs.80-100. A magnetic strip card costs around Rs.30. However, going forward this cost may be passed on to the users. Even now, if you lose the card you may have to pay for a new one.
How does it work?
The reimbursements, like your salary, come through your employer. To go digital, the employer needs to tie up with one of these entities. “An employee cannot opt for it individually,” said Aditya Gupta, chief operating officer, Udio.
The reimbursement amount can be used either through a card or an app. Both Zeta and Udio also offer prepaid cards. Zeta’s card is on the Mastercard platform and is issued by RBL Bank Ltd. Udio’s card is also by RBL Bank, but on Visa’s platform.
Some companies require you to complete a KYC process by submitting a photo identity and address proof. This could be a government-issued document such as driving licence, Aadhaar card, voter identity card, passport; or company identity card, bank statement or telephone bill. Other companies coordinate with your employer.
Once you have an e-wallet, your employer can load the prepaid card with the reimbursement amount. For instance, if your annual medical reimbursement is Rs.15,000, it would amount to Rs.1,250 per month. Your employer can load Rs.1,250 to the card every month. This money can be used at outlets recognised as hospitals and pharmacies.
“Say, you don’t use the entire amount. Then, at the end of the financial year, the remaining amount will be sent back to your employer—who will deduct tax and send it to you or to your bank account,” said Turakhia.
Is it worth it?
All e-wallet companies want to encourage consumers to leave the money in their wallets and increase the number of transactions using e-wallets. By giving access to companies to put money in the e-wallet and tapping the reimbursements space, the e-wallet companies are trying to increase the activity in their wallets.
Is it convenient? These are early days and we will have to wait and watch how it pans out. As an employee, this option will be available to you only if your company opts for it.