With demonetization in full swing, payment providers are scrambling to find new digital methods to allow people to send money. A common complaint has been that most digital methods of payment require an active Internet connection and cannot work on feature phones which are still common in rural India.
Private sector lender YES Bank is the latest attempting to reach the rural population with a product called SIMsePay which uses a SIM jacket to enable mobile banking on any phone. A SIM jacket is a smart sticker which can be pasted on an existing SIM card to install a mobile banking app as a SIM toolkit (remember those default apps a telecom service provider gives). YES Bank had partnered with Taisys Technologies for these mobile banking SIM jackets back in July 2015.
YES Bank is targeting customers of rural and district co-operative banks which do not have a mobile banking application of their own. It has tied up with District Co-Operative Bank, Dehradun and will be tying up with 10-12 co-operative banks in the coming weeks. Customers of these banks can get the SIMsePay stickers from bank branches.
In the second phase, YES Bank will be having a more direct approach with customers and distribute them through their network of banking correspondents. The bank plans to garner a base of 500,000 SIMsePAY users by 2017.
The sticker can work on standard, micro or nano SIMs of any telecom service provider. The SIMsePAY sticker will be linked to a co-branded prepaid wallet (which can be loaded up to Rs 50,000) or a prepaid card issued by YES Bank. Note that semi-closed wallets such as Paytm and MobiKwik have a limit of Rs 20,000 set by the Reserve Bank of India (RBI). However, a spokesperson for YES bank said that these prepaid wallets have a higher limit as customers have full KYC from banks.
Customers can load money in the wallet via IMPS of NEFT and co-operative bank employees will be helping customers to load money initially. The wallet is bank agnostic and a customer from any bank can transfer funds into the wallet.
What can SIMsePay do
- NEFT/IMPS based Fund Transfers
- Check balances and generate mini-statements
- Payments to merchants for small and large value purchases
- Bill Payments, Top-ups, and Recharges
- In addition SIMsePay will have local language support by detecting which area a customer is in.
How does it send instructions to the bank?
Note that SIMsePay does not use USSD to run its mobile application. Instead, it uses encrypted SMS through a hardware security modules (HSM) to send messages to and from the bank. YES Bank says no additional charges or special charges on the encrypted SMS will be levied on customers. But a spokesperson for the bank said that normal SMS charges from an operator will be applicable depending on their plan.
On first glance, YES Bank seems to be hitting the right notes in trying to get the underbanked to use digital methods of payment without an Internet connection. But adoption depends on educating its customers. Rural customers might still not comfortable with internet banking through NEFT or IMPS which requires them to remember bank account numbers, IFSC codes and MMIDs. Remember, one of the main features of the Unified Payments Interface (UPI) is the virtual payment address (VPA) which can be something as simple as shashidhar@icici. The VPA was created as customers could not remember IFSC code and bank account numbers and linked their accounts to it.
As such, it feels like customers will have to remember a set of very complicated numbers to pay someone. A single digit error while entering details would mean that money would be credit to someone else’s account. Perhaps, if the NPCI would expand to the UPI to cooperative banks as well, it might mitigate some of the pains of remembering an account number.