In what could be the beginning of the Internet revolution, Reliance Jio, the broadband service owned by Reliance Industries, is creating a payment wallet that could be used with kiranas (mom-and-pop shops) across the country. Sources in the industry say that the Jio wallet will work with startups that are building business models around kiranas to make payments (consumer transactions) digital and also to empower the kirana with knowledge on their customers. The company will start its pilot with 1,400 kiranas in a couple of months.
Solving the data-and-payments dilemma
What is the data conundrum that the company wishes to solve?
Sources say that the data collected on consumer transactions will be used to empower the kirana owners to connect better with their customers and to avoid dumping from consumer goods companies. This could improve stocking in stores and will help them gain better margins (by stocking products that consumers buy regularly). More importantly, the consumer goods company has the relevant data to streamline its supply chain and work with distributors to make the kirana network more efficient. These data analytics and supply-chain solutions will be offered by startups that use the Jio platform.
For Reliance Jio, this is a test bed in making consumption of the Internet universal in this country by bringing costs down for startups that use their services and the consumers who will connect on their WiFi networks to pay the kirana. According to World Bank, there are only 220 million broadband users in the country. There are also 300 million smartphones that are going to be shipped in India by the end of 2016. But the problem is that only around 60 million consumers use services over the smartphone.
Here is why they want to solve payments?
Reliance Jio wallets can start a payments revolution and actually add 200 million Indians Internet consumers. Today, the payments industry has just about started to take off and is as small as $1 billion in revenues. The opportunity to digitise payments (including domestic business-to-business payments) is $1 trillion. Now, if Reliance Jio works with startups that use the India Stack (Aadhaar) to enable digital capture of information and facilitate payments then the system will bring payment costs down. For every card and net banking transaction, the banks and switches, like Visa, make 1.8 percent from the consumer. With the Jio wallets integrated with startups the prices may drop to less than half percent.
"Such a platform is powerful and can change the way new consumers are added to the payments network," says Ritesh Agarwal, Co-founder of fintech company FonePaisa.
The data collected (financial payments data between businesses) can then be used by banks to provide working capital loans to distributors and kiranas who are in need of credit to buy stock and keep their business rolling.
Here is how it will work
A customer walks into the store and connects to the WiFi of the store and selects all the items that he wants to purchase. The items are then bagged by the shopkeeper and payments are made digitally in the store. In the second case, the customer selects a service from home and makes payment to the kirana through the India Stack's Unified Payment Interface or through any payment mechanism. The items still get delivered home. Now the data kicks in on consumer shopping habits. But that's not where the business is today. Startups can tell where the kirana is bleeding and where he has been punching in money.
The digital wallets of Jio can also connect the kirana to the distributor for stock replenishment (again through a B2B app) and help them streamline the supply chain with the consumer goods company to the distributor.
"The kirana should be the centre of social change and data can change the way they can improve their lives," says Srinibas Behera, Founder of Retigence Technologies, whose product StockWise aims to help kirana stock better and work smart.
Jio plans to spring life into a million services for consumers and businesses. It can change the way companies deliver their services, because analytics services and software can no longer be decoupled. Perhaps 10 million kiranas and 800 million consumers are going to experience the Internet like nobody else and Reliance Industries is in the centre of that revolution.
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