google-play-cards
Google has introduced Google Play prepaid vouchers which will allow users to buy digital content (apps, books, buying and renting of movies) on Google Play starting today. The vouchers will be priced at Rs 500, 1,000 and 1,500 and will be available at certain Vijay Sales and Spice Hotspot stores in Delhi NCR, Mumbai, Pune, Hyderabad, Bengaluru, Kolkata and Jaipur.

Users can buy the vouchers from the cashiers at the shops using cash or cards, but frankly, it’s likely that they’ll be paying cash. Google Play store accepts credit cards and some debit cards. On purchase, they’ll get a redemption code, which will be used to buy digital content.

Why this form of billing is important is because Google’s Play Store guidelines do not allow third party payment systems, though this has been relaxed selectively for some partners, like Airtel’s music service Wynk.

Why go offline?

1. To encourage purchase of apps: It’s noteworthy that the deal for rolling out Google Play vouchers isn’t just with any retail outlet: it’s with two handset retail outlets.

My sense is that this isn’t just about Google Play enabling offline purchases: it’s also about bringing with it an assisted model of purchase of apps. India has a large base of first time smart phone users who aren’t familiar with app stores, searching for and purchasing apps. It’s likely that for many users, the apps that remain on their smartphones are those that came preloaded on the phone.

The deal with Spice and Vijay Sales, both of which are retail handset dealers, will possibly allow Google two things: to enable assisted purchase of apps from the Play store, which is something that AppsDaily does, and also perhaps ensure that salesmen are incentivised to teach consumers how to buy apps from the app store. At least with AppsDaily, I’ve noticed that the moment a consumer purchases a handset, the salesmen try and sell them apps for the handset. Note that, according to this Economic Times story, the margins in this business are quite low. At the time that it last raised funding (around $16 million), AppsDaily had a retail network of 7000 stores across 700 cities in India, and said it had 3 million paid customers, and expected to cross Rs 130 crore in gross revenue in this financial year.

2. Because Google seems to be incapable of doing carrier billing partnerships in India: There are those who aren’t comfortable with using their debit or credit cards for purchasing apps either, and for them, the easiest solution is carrier billing, which means that users buy content and apps from stores using money stored in their mobile wallets. Carrier billing is also critical in an emerging market like India, since the credit card penetration is still quite low in the country.

Google still doesn’t have ubiquitous carrier billing integration. It has previously been in talks with Airtel for carrier billing for a couple of years now and we’re not sure if it eventually inked carrier billing deals with Reliance Communications in 2012, and Uninor (in 2011). Meanwhile, competitors such as Microsoft had inked carrier billing deals with operators such as Idea Cellular, and the Nokia Store (now owned by Microsoft) had rolled out carrier billing for telcos like Airtel & Vodafone in May 2012 and Reliance Communications in February 2011. Microsoft has since shut the Nokia Store, and migrated users to the Opera Store.

Also read: On making Carrier Billing independent of Carriers in India

Shouldn’t Google need an RBI license for Google Play vouchers?

The denominations for purchase of goods from the Google Play store are rather high, starting at Rs 500. This is clearly not meant for a single transaction. Google Play is a marketplace for apps and digital goods, and the Google Wallet allows the purchase of third party digital goods, and hence allows the storage of money. It appears to be a semi-closed prepaid wallet, so shouldn’t Google need a semi closed prepaid wallet license from the Reserve Bank of India for it? Remember that the moment Flipkart switched from being an ecommerce business to an ecommerce marketplace, it shut down its wallet for the marketplace business, and restricted wallet purchases to its music store Flyte (where Flipkart owned the inventory, hence not a marketplace).

India has more mobile wallet companies that you can count on your fingertips, all scrambling for a user-landgrab, increasing transaction sizes and some allowing payments through the offline route. We wonder why Google didn’t consider partnerships with some (or all) of these wallets, instead of building its own network.