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Google’s Play Store vouchers in India are from offshore entity; To add more retail partners


In our report on Google’s Play Store vouchers in India, we’d raised some questions regarding whether Google needs a semi-closed prepaid wallet license in India, since it allows the purchase of products (apps) from third party vendors (app developers) using a stored value card (Gift card vouchers). It isn’t a closed wallet, because you’re not only buying Google products using the vouchers. This is exactly why Amazon India uses Qwikcilver for allowing purchase from products on its Amazon.in website, since it’s a marketplace and not a retailer. India hasn’t allowed Foreign Direct investment in eCommerce, so foreign entities cannot set up multi-brand retail stores in the country.

Google informs us that the the gift cards (denominated Rs 500, Rs 1000 and Rs 1500), are issued by an offshore Google entity and only being distributed in India, which, to us, appears to be an interesting loophole in the RBI regulation, which therefore, it appears, allows companies to create gift cards abroad and distribute them in India, while Indian companies need to buy a license to do the same time.

There’s one thing though: how are these being issued as fixed value Rupee denominated cards, and not dollar denominated cards? Is the dollar value being adjusted in the background, in line with changes in the exchange rate? It’s worth noting that one of Google’s partners in this rollout, BK Modi’s Spice Group, recently got a semi-closed prepaid wallet license from the Reserve Bank of India.

Google also says that they will seek more retail partners for this rollout: to begin with, they’re retailing through 125 Spice Hotspot and Vijay Sales stores, across Delhi NCR, Mumbai, Pune, Bengaluru, Hyderabad, Kolkata and Jaipur. They will gradually scale to around 400 outlets in 50 cities with these two partners, and look to add more partners in the second half of the year.

Remember MOL?

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What Google is doing is perhaps not without precedence, though. MediaNama readers might remember MOL cards, which allowed users to purchase MOL credits at Zapak Gameplex’, Sify Cybercafes and Reliance Webworlds, and could be used for payments to Zynga and Facebook. That was virtual currency, and something we don’t think the RBI has dealt with yet. MOL still exists, even though their offline partnerships apparently no longer exist. 100 MOL points still amount to Rs 100, and their website indicates that they’re retailing online via three players: respawn, gamersgift.com and gamermall.in.

Google’s emailed responses to MediaNama’s questions

MediaNama: Since Google is enabling the purchase of third party apps via the Google Play store, please explain why the Google Play store vouchers don’t require a semi-closed prepaid wallet license in India.

Google: Gift Cards are issued by an offshore Google entity and will be sold in India via local distributors. Customers can redeem the value of the Gift Cards with the same offshore Google entity to make digital purchases only on the Google Play Store. Gift Card is operating well within the parameters of the Relevant Provisions in India.

Relevant provision meaning:

The relevant provisions of the Payment and Settlement Systems Act, 2007 and rules made thereunder, as well as applicable rules and regulations issued by the RBI from time to time, including provisions of the Master Circular – Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India issued by the Reserve Bank of India.

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MediaNama: What kind of a retail network does Google get access to via its partnership with Vijay Sales and Spice Hotspot?

Google: In the 1st phase of our launch we are concentrating on Consumer Electronics and Speciality – Mobile Stores with national presence. Bulk of Mobile phones sold in India are through assist-sales and we are looking at these modern retail chains to spread awareness at the point of purchase that a consumer can now purchase digital content on the Play store even if they do not have a credit card. Spice Hotspot and Vijay Sales give us access to ~400 stores across ~50 cities in the country.

MediaNama: How many stores will the vouchers be sold in?

Google: To begin with we will be selling in 125 stores of Vijay Sales and Spice Hotspot across Delhi NCR, Mumbai, Pune, Bengaluru, Hyderabad, Kolkata and Jaipur. We will gradually scale to all the outlets of these 2 chains in the coming months and will be adding more chains in our network in H2’15.

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© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ