Just Buy Live and Religare tie up to launch ‘Udhaar by Just Pay’

Just Buy Live and Religare Finvest Limited have partnered to launch a revolutionary credit product for retailers across the country called – Udhaar by Just Pay. The new product, ‘Udhaar by Just Pay’, aims to offer retailers structured credit lines for their stock-in-trade requirements.

India has the largest entrepreneur population in the world. Over 50 million people are self-employed, from street vendors to kiranas to corner stores. However lack of manufacturing and services jobs have led them to sell anything to make ends meet coupled with a weak public education system that struggles to enable 300 million young people to get skilled jobs. They either turn to menial jobs, or most likely, indulge in basic trade.

India’s micro, small & medium entrepreneurs are privy to the largest unorganized lending system in India. Distributors of all products, from soaps to sofas, software to hardware and water to watches afford unsecured, subjective business credit to their retailers. The combined value of all these credit lines is over 1 lac crore on any given day.

Interestingly 98% of these MSMEs have never borrowed a rupee from an institution, being solely dependent on multiple suppliers. This distributor mostly controls the area the retailer’s shop is located in sharing a precarious relationship with them. As long as goods are being bought as per the distributors wishes and terms the system works. When there is a dispute between two parties, invariably the smaller retailer suffers being heavily dependent on brands and often losing considerable business. It is a seller’s market at the bottom.

If India’s “aam dukandaar” had access to capital, they could choose what, when and whom to buy from. Margins would improve as they could pay up front for inventory and avail cash discounts while increasing varieties on offer.

To tackle this skewed relationship and empower retailers, Just Buy and Religare Finvest through ‘Udhaar by Just Pay’ will offer structured credit lines to eligible retailers on the platform for their stock-in-trade requirements. Just Buy aims to reach out to millions of small businessmen and women, empowering them with the freedom to become contributing entrepreneurs not just to support their families but uplifting the social fabric around them.

In the developed world, MSMEs have significant access to structured business credit, without hypothecating every asset they own.

Why not in India?

Indian retail banks have so far not lent to “aam dukandaars” citing high costs of acquisition and possible defaults. Recently the Government has also recognized this issue and has mandated all banking institutions to disburse 7.5% of their loan books as unsecured lines to the section that want to start or already own a small business.

Just Pay along with its primary lending/finance partner Religare Finvest clearly believe otherwise and have already pre-approved credit lines for over 20,000 Just Buy retailers and aim to provide 5 lac retailers with structured lines by the end of 2016.

“Offering an entrepreneur the freedom to trade I believe is a fundamental right. Why should retailers depend on their suppliers for working capital? Consumers don’t depend on car companies for loans, nor do they expect credit from shopkeepers. That’s the job of the lending banks and credit card companies. That’s what we intend to do for India’s “aam dukandaar”, give them credit lines to buy whatever and whenever. This will truly level the playing field and democratize trade,” says Sahil Sani, Chairman & CEO, Just Buy Live Enterprise Pvt. Ltd.

Kavi Arora, MD & CEO, Religare Finvest Limited says, “Udhaar is a unique, hassle free, credit facility provided at the click of a button. We at Religare Finvest Limited believe that SMEs are the engines of India’s economy, innovation and prosperity. In line with this philosophy Udhaar is an offering which gives the aam dukandaar access to formal credit and a limit with multiple tranche withdrawal facility that enables the retailers to access credit as per their requirements. The ‘Udhaar’ offering will not only benefit the small retailers to build and grow the business but also enable financial inclusion at the bottom of the pyramid. This initiative further strengthens our ongoing commitment to the SME’s and the entrepreneurial ecosystem.”

Banks now experimenting with ultrasonic sound waves for payment transfer

HDFC Bank has tied up with mobile payments technology firm ToneTag and is testing a new mechanism that will allow transferring money from a phone to a point of sales (PoS) terminal without swiping a debit or credit card. Using this the PoS terminals can be paired with a mobile phone and once the transaction is authorised, money will be deducted from either the customer’s HDFC Bank mobile wallet Payzapp or via the mobile banking application.

Unlike the old way, where a card was needed to carry out a transaction on PoS, this technology will allow the customer to complete the transaction by just using the phone. In this, the data can be transferred in an encrypted manner, which will then ensure the money gets deducted either from the account or from the mobile wallet. For this, the customer needs to be in the proximity of 15 centimeters from the merchant terminal. With this feature, the lender is looking at opening a new category of proximity payments in the country.

HDFC Bank declined to comment on it. However, sources close to development said the bank is currently working on the pilot and going ahead, it is likely that ToneTag will also tie up with other banks to offer similar services.

Experts say considering that HDFC Bank is currently one of the leaders in PoS terminals, logistically, it will be easy for the lender to add this software to its existing terminals. According to the Reserve Bank of India (RBI) data, the bank is the leader in the PoS network with about 2,76,362 terminals in the month of November.

Bankers believe considering that a lot of consumers have taken to mobile banking and mobile wallets, this payment method may take off better than the contactless debit/ credit card. “Despite the fact that several banks had launched contact less debit and credit cards we haven’t seen these take off in a significant way as it is more cost intensive and requires changes in the terminal,” said a banker.

Such cards work on near-field communication (NFC) technology, which employs radio transmission to ascertain contact when the cards are tapped or waved near a terminal. These enable customers to make payments by waving or tapping the cards instead of swiping them.

Banks are experimenting more with alternate payment solutions after RBI last year allowed the lenders to process contactless transactions below Rs 2,000 without a personal identification number (PIN). Bankers believe about 60 per cent of the transactions at the PoS terminals are below this threshold, these payment solutions will take off.

This is also in line with HDFC Bank’s digital strategy wherein, the lender is focusing on reducing cash transactions and trying to add more consumers to use digital banking. According to the RBI data, in the month of November, the lender recorded transactions worth Rs 7666.34 crore via its mobile banking application.