Google’s new plan to push Google Pay in India: cashback incentives in Android apps

Google is gunning for India’s payment companies. The U.S. search giant entered India’s payment space in 2017, and now it is hatching an initiative that could boost usage of its Google Pay service by tying it tightly into Android apps in the country.

The company has built an in-app engagement rewards platform that promises to help developers and businesses retain users and drive engagement on their apps, two sources familiar with the matter said. It plans to formally launch the project through partners using an SDK later this year, TechCrunch understands.

Sitting at the core of this new play is Google Pay, which will be used for transactions between businesses and users, thereby expanding the reach of Google’s payment service.

Internally dubbed as Project Cruiser, the initiative has been in works since last year and it is led by Google’s Next Billion Users team, sources said. Executives from the company have reached out to several businesses in India in recent months to coax them into coming on board, they added.

The platform, if incorporated by developers into their apps, will allow app developers to incentivize users to perform certain actions in their app in a “scalable” fashion. For example, placing their first order, invite friends or adding a payment method, will all result in users earning a small sum of money. In a pitch, Google executives have described these actions as “north star” metrics — something that the company believes its current products do not currently offer.

A Google spokesperson declined to comment on the specifics of Project Cruiser, but said, “We’re always looking at ways to serve the next billion users better, but we have nothing to share at this point.”

Part of the rationale behind the project is to help businesses retain customers. A growing number of users are deleting new apps not long after installing them, the company executives said to have told prospective partners in pitches.

This cash-laden approach of using incentives to fuel engagement is a departure from how Google has typically urged developers to drive engagement on their apps: by building a high-quality experience that uses triggers like notifications in a responsible manner.

Pushing Google Pay

The company has an additional incentive at play. It has told developers that all rewards on the app will be bandied through Google Pay. That said, one source told TechCrunch that there is a plan to support other payment options from third parties at a later stage, a move that is likely to appease claims of platform abuse. The company has, interestingly, also committed to not take a cut of Google Pay revenue generated from developers through the initiative.

Google has been aggressively pushing the adoption of Google Pay in India, a market where digital payment services have grown exponentially in recent years. The app, initially launched in India as Google Tez in 2017, is the first service from Google to offer users actual money — in the form of cashback — to spur engagement. Late last year, Google ran a promotional campaign that offered Duo video chat users in India up to Rs 1,000 ($14) for inviting friends to the app.

India has emerged as a crucial growth market for Google, which is increasingly looking at developing nations to search for new users and revenue. The U.S. firm clocked $1.4 billion in revenue in India in the fiscal year ending in March 2018, filings show, and the wider Asian region recently became its fastest-growing geography for sales.

In its quest to hold a core position in India, Google has launched a number of services to better serve the needs of users in India and other emerging markets, including data-friendly YouTube Go and Android Go apps. It also funds free Wi-Fi connectivity at 400 railway stations in India, a project that graduated to become Google Stations for several other markets.

Beyond infrastructure level plays, it has conjured up bespoke products in India. Those include tools to help small and medium businesses in India establish an online presence, as well as a neighborhood app, a literacy app and a concierge service. It also acquired popular app ‘Where Is My Train’ as part of a wider transportation data play.

“We’ve learnt that when we solve for a place like India, we solve for everyone around the world,” Sundar Pichai, CEO of Google, said at an event in New Delhi in 2017.

Google’s user-engagement initiative is potentially a tough development for independent mobile wallets such as Paytm and Mobikwik. Although there’s the potential to add their support later, Project Cruiser promises to give Google Pay a massive boost by tapping into India’s digital cashback culture.

That’s sure to make it an additional concern to those who are increasingly wary of Google’s influence in digital India. Just last month, the Competition Commission of India (CCI) opened an investigation into the alleged abuse of Android’s domination market position.

India’s ride-hailing firm Ola is now in the credit card business, too

A day after India’s largest wallet app Paytm entered the credit cards business, local ride-hailing giant is following suit. Ola has inked a deal with state-run SBI bank and Visa to issue as many as 10 million credit cards in next three and a half years, it said today.

The move will help Visa and SBI bank acquire more customers in India, where most transactions are still bandied out over cash. For Ola, which rivals Uber in India, foray into cards business represents a new avenue to monetize its customers, as TechCrunch previously reported.

With about 150 million users availing more than 2 million rides on its platform each day, Ola is sitting on a mountain of data about its users’ financial power and spends. With the card, dubbed Ola Money-SBI Credit Card, the mobility firm is also offering several discounts and savings to retain its loyal customer base.

Ola, which is nearing $6 billion in valuation and counts SoftBank and Naspers among its investors, said it will offer its credit card holders “highest cashback and rewards” in form of Ola Money that could be redeemed for Ola rides, and flight and hotel bookings. There will be seven percent cashback on cab spends, five percent on flight bookings, 20 percent on domestic hotel bookings (six percent on international hotel bookings), 20 percent on over 6,000 restaurants, and one percent on all other spends.

“Mobility spends form a significant wallet share for users and we see a huge opportunity to transform their payments experience with this solution. With over 150 million digital-first consumers on our platform, Ola will be a catalyst in driving India’s digital economy with cutting edge payment solutions,” Bhavish Aggarwal, cofounder and CEO of Ola, said in a statement.

Why credit cards?

Ola appears to be following the playbook of Grab and Go-Jek, two ride-hailing services in Southeast Asian markets that have ventured into a number of businesses in recent years. Both Grab and Go-Jek offer loans, remittance and insurance to their riders, while the former also maintains its own virtual credit card. Interestingly, Uber, which also offers a credit card in some markets, has no such play in India.

The move will allow Ola to look beyond ride-hailing and food delivery, two businesses that appear to have hit a saturation point in India, said Satish Meena, an analyst with research firm Forrester.

In recent years, Ola has started to explore financial services. It offers riders “micro-insurance” that covers a range of risks including loss of baggage and medical expenses. The company said earlier this year, it has sold over 20 million insurances to customers. Using Ola Money to facilitate cashbacks also underscores Ola’s push to increase the adoption of its mobile wallet, which according to estimates, lags Paytm and several other wallet and UPI payment apps.

The company has also made major push in electric vehicles business, which it spun off as a separate company earlier this year. In March, its EV business raised $300 million from Hyundai and Kia. The company has said that it plans to offer one million EVs by 2022. Its other EV programs include a pledge to add 10,000 rickshaws for use in cities.

India’s largest mobile wallet company Paytm now offers a credit card

Paytm, India’s largest mobile wallet app, has branched out to several businesses in recent years as threat from Google and Facebook grows. On Tuesday, it added another category to the list: credit cards.

The firm, operated by One97 Communications, today unveiled Paytm First Credit Card with lofty benefits as it races to bulk up its financial offerings. The cards, issued by Citi Bank, will be the first in the country to offer unlimited, one percent cashback on purchases, Paytm claimed in a statement. The company is hoping to rope in about 25 million credit card customers in the coming months.

The penetration of credit cards remains very low in India with under 50 million people possessing one. With people conducting most of their businesses through cash in the nation, banks have little understanding of a customer’s credit history and score. And it also doesn’t help that banks in India are still wary of issuing credit cards to those who don’t perfectly fit the traditional blue collar job.

But why is a company that made its name through a mobile payment wallet open to its customers engaging with credit card companies? Paytm itself is struggling to grow its business and retain existing customers. Some of its recent major bets haven’t exactly paid off. Its ecommerce business Paytm Mall remains tiny despite bleeding money.

But more importantly, payments itself has become a commoditized space. Users park their money in Paytm and do transactions from there. Paytm makes money from this accumulated sum. This business flourished for years, especially in the months after the Indian government invalidated much of the cash in the nation. But then the government launched its own payment infrastructure called UPI, which removes the need for a middleman.

This has made payments more convenient for users, who are increasingly jumping ship. UPI apps such as PhonePe that have emerged in the last two and a half years now see more transactions than wallet apps. To make matter worse for Paytm, Google and Facebook — two companies that have larger userbase in India — have entered the payments space. Google Pay reached 100 million installs on Google Play Store recently, and WhatsApp plans a nation-wide roll out of its payment feature in India later this year.

So Paytm is now expanding its financial offerings and credit card play fits well in it. With more than 200 million active users, Paytm rivals banks on both the number of customers and volume of transaction it processes.

“Our new offering is designed to bring utmost flexibility to our customers in their digital payment options and will help spur large-ticket cashless payments,” Vijay Shekhar Sharma, chairman and CEO of One97 Communications said in a statement.

Backed by SoftBank, Alibaba, and most recently Warren Buffett’s Berkshire Hathaway, Paytm has the capital to spur the adoption of its new credit card. As part of the package, Paytm’s credit card holders will be able to avail dining, shopping, travel and other offers that Citi Bank provides to its privilege customers. In the first four months of issuing a card, the company will offer its customers discounts worth Rs 10,000 ($142) on spending of Rs 10,000.

Paytm First Credit Card will work both in India and elsewhere and support contactless transactions. Like any other credit card, customers will be able to pay back a sum in multiple monthly instalments. Paytm First Credit Card will charge users a nominal fee of Rs 500 ($7.1) that will be waived off if their spendings through the card exceeds Rs 50,000 ($710) in a year.

If the gamble works, Paytm will be able to retain some customers and convince many to do big-ticket transactions. For Citi Bank, this partnership is just an easy ploy to acquire some customers.

In the meantime, Paytm continues to aggressively expand its financial offerings. In recent years, it has launched a digital payments bank, and has started to offer prepaid Forex cards for international purchases. It also lets customers buy gold, and employers issue food allowance wallets for their staff. Last year, the company announced Paytm Money to facilitate purchase of mutual funds.

Earlier this year, the company launched Paytm First, a subscription bundle that includes access to subscriptions from other services such as Zomato, Uber, Gaana, and Eros Now. In an interview with TechCrunch late last month, Paytm’s Sharma said payments is the moat around which you can build a number of services. “Now that’s a business model… payment itself can’t make you money.”

India’s most popular services are becoming super apps

Truecaller, an app that helps users screen strangers and robocallers, will soon allow users in India, its largest market, to borrow up to a few hundred dollars in the nation.

The crediting option will be the fourth feature the nine-year-old app adds to its service in the last two years. So far it has added to the service the ability to text, record phone calls and mobile payment features, some of which are only available to users in India. Of the 140 million daily active users of Truecaller, 100 million live in India.

The story of the ever-growing ambition of Truecaller illustrates an interesting phase in India’s internet market that is seeing a number of companies mold their single-functioning app into multi-functioning so-called super apps.

Inspired by China

This may sound familiar. Truecaller and others are trying to replicate Tencent’s playbook. The Chinese tech giant’s WeChat, an app that began life as a messaging service, has become a one-stop solution for a range of features — gaming, payments, social commerce and publishing platform — in recent years.

WeChat has become such a dominant player in the Chinese internet ecosystem that it is effectively serving as an operating system and getting away with it. The service maintains its own app store that hosts mini apps and lets users tip authors. This has put it at odds with Apple, though the iPhone-maker has little choice but to make peace with it.

For all its dominance in China, WeChat has struggled to gain traction in India and elsewhere. But its model today is prominently on display in other markets. Grab and Go-Jek in Southeast Asian markets are best known for their ride-hailing services, but have begun to offer a range of other features, including food delivery, entertainment, digital payments, financial services and healthcare.

The proliferation of low-cost smartphones and mobile data in India, thanks in part to Google and Facebook, has helped tens of millions of Indians come online in recent years, with mobile the dominant platform. The number of internet users has already exceeded 500 million in India, up from some 350 million in mid-2015. According to some estimates, India may have north of 625 million users by year-end.

This has fueled the global image of India, which is both the fastest growing internet and smartphone market. Naturally, local apps in India, and those from international firms that operate here, are beginning to replicate WeChat’s model.

Founder and chief executive officer (CEO) of Paytm Vijay Shekhar Sharma speaks during the launch of Paytm payments Bank at a function in New Delhi on November 28, 2017 (AFP PHOTO / SAJJAD HUSSAIN)

Leading that pack is Paytm, the popular homegrown mobile wallet service that’s valued at $18 billion and has been heavily backed by Alibaba, the e-commerce giant that rivals Tencent and crucially missed the mobile messaging wave in China.

Commanding attention

In recent years, the Paytm app has taken a leaf from China with additions that include the ability to text merchants; book movie, flight and train tickets; and buy shoes, books and just about anything from its e-commerce arm Paytm Mall . It also has added a number of mini games to the app. The company said earlier this month that more than 30 million users are engaging with its games.

Why bother with diversifying your app’s offering? Well, for Vijay Shekhar Sharma, founder and CEO of Paytm, the question is why shouldn’t you? If your app serves a certain number of transactions (or engagements) in a day, you have a good shot at disrupting many businesses that generate fewer transactions, he told TechCrunch in an interview.

At the end of the day, companies want to garner as much attention of a user as they can, said Jayanth Kolla, founder and partner of research and advisory firm Convergence Catalyst.

“This is similar to how cable networks such as Fox and Star have built various channels with a wide range of programming to create enough hooks for users to stick around,” Kolla said.

“The agenda for these apps is to hold people’s attention and monopolize a user’s activities on their mobile devices,” he added, explaining that higher engagement in an app translates to higher revenue from advertising.

Paytm’s Sharma agrees. “Payment is the mote. You can offer a range of things including content, entertainment, lifestyle, commerce and financial services around it,” he told TechCrunch. “Now that’s a business model… payment itself can’t make you money.”

Big companies follow suit

Other businesses have taken note. Flipkart -owned payment app PhonePe, which claims to have 150 million active users, today hosts a number of mini apps. Some of those include services for ride-hailing service Ola, hotel booking service Oyo and travel booking service MakeMyTrip.

Paytm (the first two images from left) and PhonePe offer a range of services that are integrated into their payments apps

What works for PhonePe is that its core business — payments — has amassed enough users, Himanshu Gupta, former associate director of marketing and growth for WeChat in India, told TechCrunch. He added that unlike e-commerce giant Snapdeal, which attempted to offer similar offerings back in the day, PhonePe has tighter integration with other services, and is built using modern architecture that gives users almost native app experiences inside mini apps.

When you talk about strategy for Flipkart, the homegrown e-commerce giant acquired by Walmart last year for a cool $16 billion, chances are arch rival Amazon is also hatching similar plans, and that’s indeed the case for super apps.

In India, Amazon offers its customers a range of payment features such as the ability to pay phone bills and cable subscription through its Amazon Pay service. The company last year acquired Indian startup Tapzo, an app that offers integration with popular services such as Uber, Ola, Swiggy and Zomato, to boost Pay’s business in the nation.

Another U.S. giant, Microsoft, is also aboard the super train. The Redmond-based company has added a slew of new features to SMS Organizer, an app born out of its Microsoft Garage initiative in India. What began as a texting app that can screen spam messages and help users keep track of important SMSs recently partnered with education board CBSE in India to deliver exam results of 10th and 12th grade students.

This year, the SMS Organizer app added an option to track live train schedules through a partnership with Indian Railways, and there’s support for speech-to-text. It also offers personalized discount coupons from a range of companies, giving users an incentive to check the app more often.

Like in other markets, Google and Facebook hold a dominant position in India. More than 95% of smartphones sold in India run the Android operating system. There is no viable local — or otherwise — alternative to Search, Gmail and YouTube, which counts India as its fastest growing market. But Google hasn’t necessarily made any push to significantly expand the scope of any of its offerings in India.

India is the biggest market for WhatsApp, and Facebook’s marquee app too has more than 250 million users in the nation. WhatsApp launched a pilot payments program in India in early 2018, but is yet to get clearance from the government for a nationwide rollout. (It isn’t happening for at least another two months, a person familiar with the matter said.) In the meanwhile, Facebook appears to be hatching a WeChatization of Messenger, albeit that app is not so big in India.

Ride-hailing service Ola too, like Grab and Go-Jek, plans to add financial services such as credit to the platform this year, a source familiar with the company’s plans told TechCrunch.

“We have an abundance of data about our users. We know how much money they spend on rides, how often they frequent the city and how often they order from restaurants. It makes perfect sense to give them these valued-added features,” the person said. Ola has already branched out of transport after it acquired food delivery startup Foodpanda in late 2017, but it hasn’t yet made major waves in financial services despite giving its Ola Money service its own dedicated app.

The company positioned Ola Money as a super app, expanded its features through acquisition and tie ups with other players and offered discounts and cashbacks. But it remains behind Paytm, PhonePe and Google Pay, all of which are also offering discounts to customers.

Integrated entertainment

Super apps indeed come in all shapes and sizes, beyond core services like payment and transportation — the strategy is showing up in apps and services that entertain India’s internet population.

MX Player, a video playback app with more than 175 million users in India that was acquired by Times Internet for some $140 million last year, has big ambitions. Last year, it introduced a video streaming service to bolster its app to grow beyond merely being a repository. It has already commissioned the production of several original shows.

In recent months, it has also integrated Gaana, the largest local music streaming app that is also owned by Times Internet. Now its parent company, which rivals Google and Facebook on some fronts, is planning to add mini games to MX Player, a person familiar with the matter said, to give it additional reach and appeal.

Some of these apps, especially those that have amassed tens of millions of users, have a real shot at diversifying their offerings, analyst Kolla said. There is a bar of entry, though. A huge user base that engages with a product on a daily basis is a must for any company if it is to explore chasing the super app status, he added.

Indeed, there are examples of companies that had the vision to see the benefits of super apps but simply couldn’t muster the requisite user base. As mentioned, Snapdeal tried and failed at expanding its app’s offerings. Messaging service Hike, which was valued at more than $1 billion two years ago and includes WeChat parent Tencent among its investors, added games and other features to its app, but ultimately saw poor engagement. Its new strategy is the reverse: to break its app into multiple pieces.

“In 2019, we continue to double down on both social and content but we’re going to do it with an evolved approach. We’re going to do it across multiple apps. That means, in 2019 we’re going to go from building a super app that encompasses everything, to Multiple Apps solving one thing really well. Yes, we’re unbundling Hike,” Kavin Mittal, founder and CEO of Hike, wrote in an update published earlier this year.

And Reliance Jio, of course

For the rest, the race is still on, but there are big horses waiting to enter to add further competition.

Reliance Jio, a subsidiary of conglomerate Reliance Industry that is owned by India’s richest man, Mukesh Ambani, is planning to introduce a super app that will host more than 100 features, according to a person familiar with the matter. Local media first reported the development.

It will be fascinating to see how that works out. Reliance Jio, which almost single-handedly disrupted the telecom industry in India with its low-cost data plans and free voice calls, has amassed tens of millions of users on the bouquet of apps that it offers at no additional cost to Jio subscribers.

Beyond that diverse selection of homespun apps, Reliance has also taken an M&A-based approach to assemble the pieces of its super app strategy.

It bought music streaming service Saavn last year and quickly integrated it with its own music app JioMusic. Last month, it acquired Haptik, a startup that develops “conversational” platforms and virtual assistants, in a deal worth more than $100 million. It already has the user bases required. JioTV, an app that offers access to over 500 TV channels; and JioNews, an app that additionally offers hundreds of magazines and newspapers, routinely appear among the top apps in Google Play Store.

India’s super app revolution is in its early days, but the trend is surely one to keep an eye on as the country moves into its next chapter of internet usage.

Google to allow users to pay for Android apps using cash

Today, the Android platform sees more app downloads than iOS, but Apple’s App Store continually dominates in terms of revenue. Now, Google is aiming to narrow the revenue gap by introducing a new way for users in emerging markets to pay for apps: with cash. The company today announced it’s launching “pending transactions,” which offers users different ways to pay that don’t require a credit card or any other traditional form of online payment.

Lack of access to credit is one of many reasons why users in emerging markets gravitate towards free-to-play and ad-supported games and applications, instead of paid downloads and in-app purchases.

To address this problem, Google has already rolled out other payment options over the years — like support for eWallets, UPI in India, and carrier billing, for example. Over the past year, it’s added 20 more carrier billing partnerships, bringing the total number of carriers supporting this option to over 170 worldwide, to reaching over a billion users through this one billing option.

But carrier billing isn’t a universal option, and it’s not always a preferred one.

To reach those users who rely more on cash, Google is now rolling out another payment option.

“We know that emerging markets are a key area of growth for you all, which is why we’re excited to announce ‘pending transactions,'” said Aurash Mahbod, the Director of Engineering responsible for the Play Store and Games on Google Play, speaking at the Google I/O Developer conference today.

“This is a new class of delayed form of payment – like cash, bank transfer and direct debit,” he explained.

The option gives an Android user the ability to choose an alternative payment method at checkout when paying for an application or in-app purchase. Instead of charging an attached credit card, for instance, the user can instead opt to receive a payment code which they can use to pay for their purchase using cash at a nearby store.

Once at the store, the user shows the payment code to the cashier and pays. Within 10 minutes after completing the transaction, the user will receive their purchase and an email with their proof of payment. (The fine print notes this can take up to 48 hours, at times, however).

While this makes paying for apps and updates easier for cash-only Android users, if they later want a refund, they won’t get cash back — only Play Store credit.

 

The Pending Transactions option is one of several updates arriving in the new Google Play Billing Library (version 2.0), but is the most interesting in terms of what it means for increasing the number of paid transactions in emerging markets.

Another notable update is the option, “Subscribe & Install”, which offers users a free trial subscription at the same time they install the app — all in one click of a button.

This feature is currently available in Early Access, and partners who have used the option are seeing an average of 34% growth in paid subscribers, Google said.

The Google Play Billing Library 2.0 — now the official way to integrate apps with Google Play Billing —  is available now in Java, with C++ and Kotlin support coming soon.

More information about the new options will be posted to the Android Developers site here.

A quiet London-based payments startup just raised among the biggest Series A rounds ever in Europe

You probably haven’t heard of Checkout, a digital payments processing company that was founded in 2012 in London. Apparently, however, investors have been keeping tabs on the low-flying company and like what they see. Today, Checkout announced that it has raised $230 million in Series A funding at a valuation just shy of $2 billion co-led by Insight Partners and DST Global, with participation from GIC, the Singaporean sovereign-wealth fund; Blossom Capital; Endeavor Catalyst; and other, unnamed strategic investors.

It’s the first institutional round for the company; it’s also one of the the biggest Series A rounds ever for a European company.

What’s so special about Checkout that investors felt compelled to write such big checks? In a sea filled with fintech startups, it’s hard to know at first glance what differentiates it — or whether investors merely spy a huge opportunity, particularly given the company’s recent revenue numbers.

Checkout helps businesses — including Samsung, Adidas, Deliveroo, and Virgin, among others — to accept a range of payment types across their online stores around the world.  According to the WSJ, the fees from these services is adding up, too. It says Checkout’s European business generated $46.8 million in gross revenue and $6.7 million in profit in 2017, information it dug up through Companies House, the United Kingdom’s registrar of companies.

Checkout also plays into two huge trends that seem to be lifting all boats — the ongoing boom in online shopping, and the growing number of businesses using online payments. Little wonder that investors poured into payments startups last year more than four times what they invested in them in 2017 ($22 billion, according to Dow Jones VentureSource data cited by the WSJ).

Little wonder, too, that payments startups that have gone public are faring well, including the global payments company Adyen, which IPO’d on the Euronext in June of last year and has mostly seen its shares move in one direction since. Indeed, the company, valued at $2.3 billion by investors in 2015, is now valued at nearly $21 billion.

Though Checkout’s Series A is stunning for its size, according to Dealroom data, it isn’t the largest for a European company. Among other giant rounds, the U.K.-based biotech company Immunocore closed on $320 million in Series A funding in 2015. In 2017, another U.K. fintech, OakNorth, a digital bank that focuses on loans for small and medium enterprises, raised $200 million in Series A funding. (It has gone on to raise roughly $850 million altogether.)

More recently, TradePlus24, a two-year-old, Zurich, Switzerland-based fintech company that insures the account receivables of small and mid-size businesses against default, also raised a healthy amount:  $120 million in Series A funding. Its backers include Credit Suisse and the insurance broker Kessler.

Amazon Pay launches peer-to-peer payments in India

Continuing its investment in India, Amazon today announced the launch of person-to-person (p2p) payments via Amazon Pay for Android users in the country. Customers can now make instant bank-to-bank transactions through the UPI platform on the localized version of the Amazon app, allowing them to settle bills and other expenses with friends, lend or return money with family, pay for services, and more. Notably, the new p2p service will also allow customers to make payments from their bank account to local stores or to Amazon delivery associates at the doorstep, who will scan a UPI QR code within the Amazon app.

The service is built on the Indian government-backed UPI platform, which is regulated by the Reserve Bank of India, and is designed for instant transfer of funds between bank accounts using a mobile device. With the Amazon Pay service, customers can either send or receive p2p payments by choosing a contact from their phone’s address book or by entering in their UPI ID or the recipient’s bank account.

When a contact is selected, Amazon’s app will automatically detect if the person is a registered Amazon Pay UPI customer, and enables the bank transfer. If the contact is not registered for Amazon Pay UPI, the customer then has the option to pay through another BHIM (Bharat Interface for Money) UPI ID or the contact’s bank account, as an alternative.

Amazon Pay also allows customers to make repeat payments more easily by displaying their recent transactions. And all the payments are secured through multi-factor authentication involving the customer’s phone number, SIM details, and the UPI PIN, says Amazon.

When the money is transferred, both the customer and the recipient are notified through in-app notifications and SMS alerts.

“Our goal is to make Amazon Pay the most trusted, convenient and rewarding way to pay for our customers,” said Vikas Bansal, Director of Amazon Pay, in a statement. “The customers trust their Amazon app and we continue to expand payment use cases directly on the app. With this launch, we have the largest selection of shopping and payment use cases on the Amazon Android app which provides added convenience and control to our customers.”

The move will also aid Amazon in its impending battle with Reliance Industries Limited (RIL) in the region. Recently, Amazon launched a program to manage the B2B inventory supply and management of a number of neighborhood mom-and-pop stores (aka kirana stores), according to a report by the Business Standard. The program, which is live in three cities in Karnatsaka, allows retailers and store owners to order online and have products delivered to their doorstep the following day, the report claimed.

The plan is to expand this program across India, if the pilot succeeds.

There are some 12 million Kirana stores in India, and they still account for a majority (~90%) of retail business in the country. However, only 3 percent are tech-enabled. That represents a big opportunity for Amazon, as the stores themselves are beginning to embrace technology in order to compete with online grocers.

Amazon Pay’s P2P feature can help feed into the retailer’s larger plans to bring India’s cash-based customers and merchants into the digital age, at the same time it works to bring e-commerce to the region and cashless payments and other services to neighborhood stores.

Along these lines, Amazon confirmed in March it was rolling out the Amazon Smile code – a QR code that’s scanned to pay for items –  to physical stores like Shoppers Stop, and others.

Combined, Amazon’s various payment initiatives can help create customer loyalty to the Amazon brand and build new habits among consumers.

Amazon is getting a late start, however, when it comes to p2p payments in India. Its rivals, Paytm, Google Pay and PhonePe, already support p2p, with Google Pay in the lead.  

With the launch of p2p, Amazon is incentivizing customers to use its service by offering up to Rs 120 cashback by sending money through UPI.

The feature is available in the Amazon app for Android, through new “Send Money” and “Request Money” links.

 

SoftBank to invest $1B into German digital payments provider Wirecard in new fintech partnership

SoftBank is making a huge investment into one of the providers of the kind of digital commerce infrastructure that underpins many of the companies that it backs. Today, Wirecard — a digital payments provider based out of Germany — announced that SoftBank Group is investing around €900 million ($1 billion) as part of a broader digital payments partnership, to help Wirecard expand into Japan and South Korea, as well as build and provide financial services to SoftBank’s extensive list of portfolio companies, which includes the likes of Uber, OpenDoor Labs, WeWork, Grab, DoorDash, Alibaba and more.

“Under the [Memorandum of Understanding], SoftBank Group will seek to support Wirecard’s geographic expansion into Japan and South Korea, as well as providing collaboration opportunities within SoftBank Group’s global portfolio in digital payments, data-analytics/AI and other innovative digital financial services,” Wirecard noted in a statement. Wirecard added that the deal is also likely to include a “joint exploration of new product and service offers in digital lending in order to leverage from high quality customer portfolios, strong liquidity and other innovative financing solutions.”

Wirecard is publicly traded and currently has a market cap of €17.18 billion (around $19 billion). It competes with the likes of Adyen, FirstData, WorldPay, Stripe and more. Having had its start as far back as 1999 in working with online gambling sites, today it also works with challenger banks and other new fintech startups like Number26 and TransferWise.

But the investment to expand in Asia comes at a somewhat thorny time for Wirecard. The company has been facing an inquiry in Singapore over fraud allegations both in Asia and its home market of Germany. It has denied the allegations.

“As global innovators, we focus heavily on expanding our networks and creating opportunities for companies with groundbreaking ideas,” Wirecard CEO Markus Braun, said in a statement. “In SoftBank we have found a partner that shares both our passion for new technologies and drive to spearhead the latest innovations, all on a global scale. In addition, through this potential partnership, we will expand our reach and products to the East Asian markets, thereby further strengthening our position in Asia.”

Wirecard said that as part of the deal, it will issue convertible bonds with a term of five years exclusively to SoftBank, convertible to 6,923,076 ordinary Wirecard shares (currently corresponding to approximately 5.6% of common stock) at €130 per Wirecard share. The deal is subject to the approval of Wirecard’s Annual Shareholders meeting, which will be held on 18 June 2019.

Wirecard offers end-to-end services covering all aspects of payments, with a particular emphasis on digital transactions. It also provides card issuing, risk management, data analytics and related services.

SoftBank has become one of the world’s most influential investors with its $100 billion Vision Fund. It’s not clear which division of SoftBank is leading this particular transaction — the news announcement specifies only that “an affiliate of SoftBank” is making the investment — but despite the Vision Fund being located in London, it’s made relatively few fintech investments in Europe out of the Vision Fund. For that reason, this stake in Wirecard, based out of Munich, is also notable.

The first involved leading a $440 million round for OakNorth Holdings, a digital banking startup. It is also reportedly a partner in a new Abu Dhabi $400 million European investment fund.

$44M-funded Omni pivots from storage to rentals via retailers

Omni simply couldn’t scale storing stuff in giant warehouses while dropping it and off picking it up from people on demand. Storage was designed to bootstrap Omni into peer-to-peer rentals of the goods in its care. But now it’s found a better way by partnering with retailers which will host and rent out goods for Omni that users will pick up themselves.

With that strategy, Omni is now formally pivoting from storage alongside its expansion from San Francisco and Portland into Los Angeles and New York. In SF and its new markets starting today, users can rent GoPros, strollers, drills, guitars, and more for pickup and dropoff at 100 local storefronts which will receive 80 percent of the revenue while Omni keeps 20 percent.

“Storage was always meant to supply a rentals marketplace. We launched storage in an Uber-for everything era and now it’s no secret that physical operations are tough to scale” Omni’s COO Ryan Delk tells me. “This new model gives our users more supply, local entrepreneurs a new revenue stream, and us the ability to launch new markets much more quickly than the old model of building rentals on top of the storage business.”

LA Omni users will be able to rent surf equipment for pickup and dropoff from local surf shop Jay’s

To that end, storage won’t come to any more markets, though storage services with delivery will continue in San Francisco. Users there and in Portland will also be able to pick up and drop off rental items from a few Omni-owned locations including its SF headquarter office. Omni will add retailer pickups in Portland and more in San Francisco soon. At least that’s one way to make Omni’s investors like Highland, Founders Fund, Shrug.vc, and Dream Machine feel better about SF real estate prices. Omni also recently doubled the monthly storage price of closed bins in SF, triggering ire from customers to cover its overhead and encourage storing individual items that can then be rented out

“Ownership has a bit of a burden associated with it” Delk tells me, referencing the shifting attitudes highlighted by Marie Kondo and the tidiness movement. Ownership requires you to pay up front for tons of use down the line that may never happen. “Paying for access when you need it unlocks all these amazing experiences.”

Omni’s COO Ryan Delk (left) and CEO Thomas McCleod (right)

Omni discovered the potential for the model when it ran an experiment. “What if we could pick up items directly from Omni?” Delk explains. Omni learned that many people “can’t afford to pay for transit both ways. It was pricing out a lot of people.” But pick-ups unlocked a new price demographic.

Meanwhile, Omni noticed some semi-pro renters had cropped up on its platform who were buying tons of a popular item like chairs on Amazon, shipping them to its warehouse, then renting them out and quickly recouping their costs. It saw an opportunity to partner with local retailers who could give it instant supplies of items in new markets while handling all the pickup and dropoff logistics.

Omni’s retail partners like Adventure 16 Outdoor & Travel Outfitters, Blazing Saddles and Sierra Surf School can choose their own prices and adjust for demand, set black-out dates, pause for vacations, and sell items like normal and let Omni know to restock them so rentals don’t cannibalize their sales. Rentals are covered by up to $10,000 in insurance so both the retailers and people who rent from them don’t have to worry. Omni users just show their ID at pick up to verify their identity, but that will soon be part of the app. Last fall, Omni hired Uber’s head of sales strategy and operations who oversaw UberEats growth from zero to 200,000 restaurants to run its retail partnerships as VP of special projects.

Delk says Omni is “all-in on the rentals” which he sees as a “pure play marketplace vs a recurring ARR business” that “democratizes access to Omni to people who aren’t the 1% in major markets.” Now someone who couldn’t afford to buy a drill for a quick home improvement project or pay to have a rental delivered and picked up can stop by their local retailer to grab it and return it later for $6 per day with no extra fees.

That in-store experience of actually being able to go same-day, hold an item, and ask questions about it could allow Omni’s rental model to compete with Amazon’s prices and delivery logistics. The one thing Amazon can’t do right now is let you try before you buy. Omni could win by letting you try without ever having to.

JCPenney explains why it dropped Apple Pay

JCPenney quietly ditched Apple Pay this month. The decision was announced in response to a customer complaint on Twitter, but without any context or further explanation at the time. JCPenney had first rolled out Apple Pay into testing in 2015, then expanded to all its U.S. stores the following year, and later to its mobile app.

The retailer now claims the move was necessitated by the April 13, 2019 deadline in the U.S. for supporting EMV contactless chip functionality.

As of this date, all terminals at U.S. merchants locations that accept contactless payments must actively support EMV contactless chip functionality, and the legacy MSD (magnetic stripe data) contactless technology must be retired.

JCPenney was not ready to comply, it seems, so it switched off all contactless payment options as a result. However, it hasn’t ruled out re-enabling them later on, it seems.

In a statement provided to TechCrunch, JCPenney explained its decision:

A third-party credit card brand made the requirement for all merchants to actively support EMV contactless functionality effective April 13, retiring the legacy MSD contactless technology in place. Given the resources and lead time associated with meeting the new mandate, JCPenney chose to suspend all contactless payment options until a later date. Customers still have the ability to complete their transactions manually by inserting or swiping their physical credit cards at our point-of-sale terminals in stores, an option employed by the vast majority of JCPenney shoppers.

It’s worth noting, too, that JCPenney is hinting here at low Apple Pay adoption among its customer base — as the “vast majority” of shoppers pay using a physical card.

That means the retailer’s decision to re-enable Apple Pay at a later date may still be in question — especially as this change allows JCPenney to fully take back ownership of customer purchase data.

Customer data is an important part of JCPenney’s plan to get the business back on its feet. Under new CEO Jill Soltau, who took the job last October, the retailer has been closing underperforming stores, hiring new execs to focus on merchandise selection and eliminating its low-margin items, noted Bloomberg following the company’s most recent earnings. It’s also reducing inventory and adjusting its buying process to ensure it doesn’t end up with excess inventory going forward.

And, as Soltau explained to investors in February, the retailer is rethinking its pricing and promotions strategies, too.

“I think that’s one of the key initiatives that we’ll be working on here in the coming months because we’re not being as strategic in how we speak to the customer and engage with the customer through our pricing and promotion,” she said. “And I would frankly say it might be a little bit confusing, and you might not know exactly when you can get the best value at JCPenney,” the CEO added.

Customer purchase data allows a retailer to better target its customers with relevant promotions, as stores are able to collect the customer’s name and card number at point of sale, which they can then combine with other demographic data like the customer’s address, phone and email.

Apple Pay, meanwhile, prevents this level of access — something that customers like, but retailers traditionally have not. In fact, the lack of access to customer data was one reason retailers were hesitant to warm up to Apple Pay in the first place, and spent years developing their rival solution, CurrentC, which ultimately failed.

Today, many major retailers incentivize customers to use their own payments solution instead of Apple Pay — as with Walmart Pay, Sam’s Club’s Scan-and-Go, or like Target does with its store card, which can be combined with Cartwheel discounts in a single barcode scanned at point-of-sale.

Apple Pay is also a more secure method of payment, which today’s consumers prefer — particularly in the case of retailers who have suffered major data breaches, like JCPenney has in the past. Plus, Apple Pay allows shoppers to carry only their phone — not a wallet stuffed with physical cards.

The removal of Apple Pay from JCPenney stores was reported earlier by MacRumors which credited Appleosophy. 9to5Mac also noted Apple Pay was pulled from the JCPenney app.

JCPenney has more than 800 stores in 49 states.

Despite being dropped by JCPenney, Apple Pay remains a top mobile payment solution. In January, it was accepted by 74 of the top 100 U.S. merchants, and 65 percent of all retail locations across the country.

JCPenney tells us it will “seek to implement EMV contactless at a later date.”