PayU India claims to have come up with a “one-tap" payment solution, a move that could disrupt the payments and wallets industry and give the company a significant advantage in the emerging cashless economy.
Competitors and banks said such a solution isn’t possible, and much will depend on the Reserve Bank of India’s (RBI’s) response to it, although PayU claimed it is compliant with the card security standards prescribed by the regulator.
This reporter has tried out the transaction, and it works just the way PayU India claims it works, although it isn’t clear how.
PayUbiz, the online payments gateway of PayU India, introduced the “one tap" payment solution that allows consumers to transact on their phones without manually keying in the CVV (card verification value) or a one-time password. You have to key in the card details the first time you use the app though.
That’s a game changer for the mobile payments industry; a one-touch technology will reduce the transaction failure rate, giving a fillip to online commerce in the country.
However, there remain concerns around acceptability of such a technology by the regulator.
“This will be a wallet killer," said Nitin Gupta, co-founder and chief executive PayU India.
The company, which currently witnesses a 30% transaction failure rate, is expecting the number to go down to 15% after the new technology is adopted by its clients. The company is already in talks with India’s largest e-commerce firm Flipkart.com and cab aggregator Uber India to roll out the technology on their payments platforms.
The technology is already available on apps such as PayUmoney and food ordering portal Twigly. It will be made available on hyperlocal delivery companies PepperTap, Grofers, online grocery store Bigbasket and handset maker Xiaomi within the next few weeks, according to the company.
The “one tap" or “one-touch" technology, which enables all mobile payments being made through debit or credit cards to happen by just tapping once on the screen, could also give stiff competition to the budding mobile wallet sector that has gained momentum due to the complexity around the three-level authentication structure required for any online transaction.
Currently, RBI mandates that every domestic credit card transaction on the Web go through three levels of authentication: the card number, the card verification value, and a 3-D secure password which in essence seeks information not available on the card either through a third-level secure password or generating an OTP (one-time password).
In developed markets, online payments are a one-click process because the regulators allow companies to store a person’s card information.
However, given the high level of credit card frauds in India, RBI restricts companies from storing a customer’s card information unless they are compliant with PCI-DSS (Payment Card Industry Data Security Standards). And even then, they cannot store the CVV.
According to PayU India, the one tap technology, which is PCI-DSS compliant, is a combination of four different technologies that together provide a seamless online payments experience to the users. It requires a customer to key in the 16 digit card number and CVV only once.
The technology does way with the first factor authentication of entering CVV each time while making an online payment. The second factor authentication, that of OTP, gets auto-completed by the mobile app (which reads the incoming message containing OTP), closing the transaction on one tap.
The technology will only be available to Android users as iOS does not allow mobile apps to read incoming messages on a phone.
The industry is divided on whether such a technology will be accepted by the regulator.
“The regulation does not allow any company to save or to even guess CVV number," said Bipin Preet Singh, founder and chief executive at Mobikwik, a payment services provider. “CVV can only be keyed in by the customer," he added.
PayUbiz has also added an additional feature, “retry", which allows customers to pick up the transaction from the point where it stops due to network issues.
PayU, backed by South Africa’s media and Internet conglomerate Naspers, has operations in 18 countries including Latin America, India, Central Eastern Europe, and Middle East and Africa.
The company is expected to roll out the solution in Europe, the UK, and South Africa—all markets inching towards the two-level authentication system for online transactions.
PayU India, which runs payment gateway PayUbiz and wallet business PayUmoney, is expected to process transactions worth ₹ 25,000 crore in the year to next March.
The company is hoping to double the transactions in the next fiscal year, says Gupta.
“This is set to disrupt the way mobile payments are made in India. With this technology, e-commerce companies will be able to deliver absolute customer delight through faster and hassle-free payments experience with just one tap. This is one in series of innovations we are going to deliver that will change the way consumers make payments online," said Rahul Kothari, business head, PayUbiz.
PayUbiz currently works with more than 10,000 companies, including 80 e-commerce firms in India. PayUmoney serves close to 100,000 customers including small businesses.