Creating a Cashless India: YES BANK Ezetap Caselet

It all started in 2005, when he decided to return to India from the Bay Area, reminisced Abhijit
Bose, Co-founder & CEO, Ezetap as his team readied themselves for a meeting with YES BANK
to brainstorm on the future roadmap of their partnership. Returning to India, Abhijit
recognized the need to strengthen the payments space in India. After working at Ngpay and
Intuit he went to launch Ezetap with Bhatkha Keshavachar. The rest as they proverbially say is
history, several rounds of funding later Ezetap today is one of the worlds most successful
smartphone based payment solution organizations, having been recently named No. 3 globally
in the CNBC Most Disruptive Organizations List.
The idea was to be more than a card swiping device, an Ezetap is a micro ATM observed
Abhijit addressing the YES BANK Digital Banking team. The real power is the scalability of
payments here. By removing the last mile obstacle and putting payments in the Cloud,
merchants get tremendous leverage, he concluded.
An eloquent speaker the Ezetap CEO had the Digital Banking and Innovation team of YES
BANK, Indias largest Greenfield bank which prided itself on Innovation in rapt attention as he
spoke of Ezetaps vision: to enable universal payment acceptance for all merchants who are
using, or will adopt, smart applications connected over the internet as their point of sale. The
two organizations were meeting in YES BANKs headquarters in Mumbais innovation district
to finalize their strategy to maximize the benefits of the revolutionary Unified Payment
Interface (UPI) launched by NPCI in 2016. The Unified Payment Interface (UPI) envisages a
payments architecture that is directly linked to achieving the goals of universal electronic
payments, a less-cash society, and financial inclusion, using the latest technology trends, laid
down in the Reserve Bank of India (RBI) Payment System Vision Document (2012-15).
YES BANK is part of a select group of Banks and Financial Institutions invited by NPCI to take
part in the launch of UPI. UPIs open API architecture allows Banks to provide transactional
payments services to even Non-Account holders. In the coming months, YES Bank was looking
at rolling out some UPI services including merchant integrated In-app payments, cab payments
for taxi aggregator apps, partnership led model for granular merchant acquisition.
On the other hand, Ezetaps 80,000+ merchant acceptance points are already using Smartphones
or PCs to interact with their customers, and they aimed to use that platform to jumpstart UPI
acceptance as another method through which Ezetap merchants can collect any form of
payment from their customers. Although UPI adoption and ecosystem may start out small, by

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enabling UPI today, Ezetap merchants would be able to support UPI without any further effort
as it grows and possibly becomes the preferred payment method in the future.
Hence, the two organizations had decided to form a crack team to:
Devise a Strategy for Ezetap and YES BANK to maximize the use of m-POS which stood
at 3 lakhs compared to a potential of 20 million
Strategy for YES BANK and Ezetap to use UPI to maximize cashless transactions in
India building on their synergies and their individual strengths
I.

The Need to Bolster Indias Cashless Economy: The Facts Pushing the Case

With almost 95% cash transactions in the country, talks of an emerging cashless economy
seem premature but is imperative. The amount of cash still in circulation in India is estimated
at around 18% of the countrys GDP as per an Axis Capital, NPCI report. Cash comes with
overheads - the cost of paper money is too high and that's not even counting counterfeiting or
pilferage or parallel economies - there's also insurance, and security. As per the annual report of
the Reserve Bank of India (RBI) for 2013-14, the amount of currency in circulation stood at
Rs.12.83 trillion with a compounded annual growth rate of 10% over the past two years.
The RBI estimates that an amount of INR 21,000 crore is spent by banks towards currency
operation costs. India is among the worlds most cash-intensive economies in the world with a
cash-to-GDP ratio of 12%, almost four times as much as other markets such as Brazil (3.93%),
Mexico (5.3%) and South Africa (3.73%). However, it is not just the costs but also the
externalities brought about by cash dominance that pose significant concerns, such as the
presence of large unorganized sectors, black money, persistent exclusion of millions from
formal financial services, loss of revenue on account of evasion of taxes and poor transmission
of monetary policy measures taken by the central bank.

Fig 1: Usage of Non-Cash Instruments as a Percentage of Total transactions : Source MIT Technology
Review
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II.

Disrupting Cash: The Gradual Road

To take a step towards the disruption of cash, an ecosystem is required that understands and
drives a fungibility between electronic/non-cash and cash payments. The new dynamics
between policymakers, supply-side participants (digital new banks and PPIs, aggregators,
acquirers, card schemes, technology providers, fintech companies and universal banks) and
demand-side participants (digitally savvy or enabled consumer, social databases, improved
connectivity, e-commerce platforms and younger consumers) is bound to lead to major shifts
and resolution of many of the traditional pain points.
As per a report released by Ken Research agency, Indias payment market is expected to
gradually rise to INR 820 crore by 2019. The payment industry, of course is not a unified
industry and comprises of various segments like mobile wallet, mobile banking and mobile
point of sale (mPOS), bill payments and online payment gateway- which are further divided
into several entities.
A. JAM Trinity: Key to a Cashless India
The JAM Trinity viz. Jan Dhan , Aadhar and Mobile holds the key to unlocking a cashless and
transformed India. The Trinity straddles across sectors and is set to form the backbone of Indias
payment ecosystem.
Banks and other financial service providers have long woken up to the need to creating a
seamless non-cash experience. Beginning with credit cards to prepaid instruments to travel
cards, several instruments have been created to enhance consumer experience and reduce cash
usage. With the rapid proliferation of internet and increasing usage of mobiles, online
transactions have also grown at a brisk pace.
The rising smartphone penetration and the growth of ecommerce and the resultant preference
for hassle-free and secured online payment solutions have been the key driver for digital
payments. Online transactions today are no longer restricted to online travel with the increase
of e-commerce, mobile and on-demand business customers have prioritized convenience
across product categories. India is witnessing a year on year growth of close to 40% in digital
transactions, at E-Billing Systems too we are observing a similar pace. In this financial year
mobile wallets have overtaken mobile banking in number of transactions. From online payment
to taxi aggregators like Uber and Ola to phone recharges the value of mobile wallet
transactions has almost tripled to 400 million from April November 2015.

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Fig 1: Growth in Mobile Banking Transactions in India: Source RBI

Fig 2: Predicted rate of mobile banking users: Source KPMG

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III.

Indias Growing mPOS Market: Potential of mPOS in India

Excerpts of a research report recently published in Forbes, declared that mobile in retail is now
a USD 5.7 Bn business globally and is far from achieving its potential. It is the single biggest
revolution since internet and India is not excluded from this market. Including Ezetap and
Mswipe there are several mPOS providers currently thriving in India with clients across sectors
ranging from banks to movie ticket aggregators to retail, cab aggregators etc.
However, one key roadblock in this space has been cash-on-delivery which conversely has
been a driver for e-commerce in India. Customers have shown reticence in making prepaid
transactions on new websites and tend to choose CoD as a preferred payment option, though in
case of large transaction amounts customers prefer card payments providing an opportunity for
mPOS service providers.
However not all small scale SME retailers can afford high end smartphones and an additional
dongle. The increase of credit and debit card users by 25% and 42% in the last two years has
made accepting cards a necessity for retailers. If the current mPOS dongles developer could
make a standardized device that could work on all smartphones alike, maybe then these
retailers could be convinced to use them.
For the large businesses, mPOS could also prove a helping hand in managing the workforce,
sales etc. by providing mobile-based inventory management, automatic sales record and so on.
India has seen great uptake in mPOS systems with various new platforms being launched over
the last two years. As per Abhijit Bose, CEO of Ezetap there are more than 500 million plastic
cards but only about half a million point of sale terminals.
The emergence and growth of mPOS systems is a definite boon for the Indian economy. It
would make it far easier for both customers and retailers to have consistency in mPOS
interfaces across the country. Moreover it will add to the Government of Indias plan to reduce
cash dependencies of the Indian people. The revenue of the POS terminal market in India is
expected to grow at a CAGR of 23.30% in terms of revenue during 2014-2019. POS terminals are
now combined with union pay, which had resulted in increased market growth and shipment
in 2014. This can be attributed to growing payment services and usage of debit/credit cards for
transactions.
A. United Payment Interface: UPI
In April 2016, the Reserve Bank of India Governor launched the Unified Payments Interface
(UPI) system on Monday, as its latest offering in boosting digital money transfers.

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The interface has been developed by National Payments Corporation of India (NPCI), the
umbrella organisation for all retail payments in the country. The UPI seeks to make money
transfers easy, quick and hassle free.
UPI with its mobile first payments design moves towards interoperable and instant payments.
The interface allows customers to make payments through a single identifier like Aadhaar
number or virtual address.
The core features will help understand the payment cycle.
1. It enables you to make payments using mobile phone as the primary device for
payments including person-to-person, person-to-businesses, and businesses-to-person
with the ability to pay someone as well as collect cash from someone.
2. The platform also allows usage of Aadhar number, mobile number, and account number
in a unified way, while not giving it away during the payment process. One just needs
to create a virtual payment addresses that are aliases with bank accounts or mobile
wallets.
3. The virtual payment addresses doesnt allow security to be compromised when a certain
merchants account is hacked, because their database will have only a list of virtual
addresses. The payment addresses are denoted by account@provider or userid@mypsp
(i.e. tarush@icici).
4. Moreover, the platform also allows users to transfer funds using only Aadhar number as
their identifier, which really equips the rural demographic.
5. Another exciting feature is the pay by date, which is made while making a collect
request to others (person-to-person or entity-to-person), which allows payment requests
to be snoozed and paid later before expiry date without having to block the services.
6. It also allows multiple recurring payments similar to electronic cash payments (utilities,
school fees, subscriptions, etc.) with a one-time secure authentication and rule based
access. This could be useful for organisations while paying salaries.
7. UPI also equips Payment System Players (PSP), the banks in this case, through their
mobile applications to allow paying from any account using any number of virtual
addresses using credentials such as passwords, PINs, or biometrics (on mobile phone).
8. UPI also makes the system fully interoperable across all payment system players
without having silos and closed systems, making you transact from any bank.
9. Lastly, the ability to make payments using 1-click 2-factor authentication all using just a
personal phone without having any acquiring (swiping) devices or having any physical
tokens.
IV.

Ezetap

Ezetap is the fastest growing mPoS company in India today. Since launching in 2011, Ezetap has
over 80,000 terminals deployed in the market, processing over $2.5M in gross transaction value
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daily. With offices in over 8 locations and a service presence across 400 locations in India,
Ezetap offers the reach and service required to offer a high and sustainable quality of service.
Ezetap customers include tens of thousands of small and large retailers across India. Leading
eCommerce, Insurance, Assisted eCommerce, Logistics, Telecom, and Delivery companies, rely
on Ezetaps applications, SDK, and platform to provide their customers with the convenience of
card payments anytime anywhere. The company is also a pioneer in the financial inclusion
sector with one of the lowest cost globally certified, made-in-India payment processing device,
helping streamline the payment and collection operations of some of the leading financial
inclusion programs in the country
Executive Team

Co-Founder & CEO: Abhijit (Bobby) Bose

Co-Founder & CTO: Bhaktha Keshavachar
CFO & SVP Operations: Byas Nambisan
SVP Products: Shirish Andhare

Milestones

2011: Founded
2012: First international customer, Seed funding
2013: First EMV product, Series A raised
2014: Series B raised
2015: Fastest growing mPoS, Series C raised

Investors

V.

Helion Ventures
Social + Capital Partnership
Berggruen Holdings
Horizons Ventures
Capricorn Investment Group
YES BANK

YES BANK was founded in 2004 on the ethos of Professional Entrepreneurship and a
differentiated approach of Knowledge Banking to provide comprehensive sector specific and
customized financial solutions to sunrise sectors of the economy. The 1st phase of YES BANKs
lifecycle from 2004-2010 was characterized by entrepreneurship and involved building strong
capabilities in the wholesale banking segment with a comprehensive product suite, which
leveraged the Knowledge Banking approach while building a strong human capital team on
the Owner-Manager-Partner philosophy. By 2010, YES BANK was recognized as one of Indias

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fastest growing banks in the previous 5 years and emerged as the Largest Small Bank in our
country, India.
From 2010-2015, YES BANK lived the Version 2.0 phase during which the focus was on
expanding the Retail Banking capabilities by drawing upon the Wholesale Banking franchise
through a B2B2C approach for client acquisition and business generation . While the previous
version was about entrepreneurship, in Version 2.0, YES BANK focused on further
institutionalizing its systems, processes and controls gearing itself for orbit shifting expansion.
The Bank built a strong platform in terms of its Brand, Distribution via Branch and ATM
footprint, Technology, Human Capital as well as Risk Management. This well calibrated growth
strategy resulted in YES BANK establishing itself as the Largest Medium Sized Bank in the
country with a balance sheet size of over ` 100,000 Crore. FY 2015-16, marked the 1st year of the
next phase of YES BANKs growth cycle of 2015 to 2020. The vision for YES BANK is to
establish itself as a meaningful LARGE HIGH QUALITY Bank by employing a focused 2pronged strategy of Deepening Mind Share and Growing Market Share.
A. Digital Banking at YES BANK
Digitized Banking YES BANK has adopted a unique Alliances, Relationships & Technology
(ART) approach to Digitized Banking to Deepen Mindshare and Grow Market share among its
consumer base. In todays dynamic and ever changing financial landscape, YES BANK realizes
that all Innovation cannot come from within the Bank. Therefore, YES BANK has taken the ART
approach and partnered with some of the best Fintech firms to deliver unique, innovative
Banking and financial solutions to our customers. YES BANK implemented Digitized Banking
solutions to address the needs of customers across the spectrum right from Corporate Banking
to Retail Customers including solutions addressing Financial Inclusion.
B. The YES BANK Ezetap Joint Brainstorming Team
Ezetap and YES BANK teams were in deep discussion on creating a joint strategic roadmap to
maximize the uptake of mPOS systems as well as utilize the UPI technology in this quest. The
joint crack team was formed comprising of senior members of both organizations to
1. Despite the phenomenal growth of mobile wallet and m-POS providers in the country,
there is a still major reliance on cash transactions (almost 94% transactions are cash
based). Devise a strategic roadmap for Ezetap to tap this huge potential market (there is
a potential of 19-20 million POS terminals in India while currently only around a million
exist (3 lakh removing multiple POS at the same outlet). Your strategy should cover but
not be limited to
a. Strategy to increasing mPOS uptake in vendors
b. Increase awareness in consumers/merchants
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c. Partnerships with wallets and banks

d. Feature phone usage options given that most phones in India are still feature
phones
2. Strategy for YES BANK and Ezetap to use UPI to maximize cashless transactions in
India building on their synergies and their individual strengths

As a member of the crack team you have to share a comprehensive solution. The solution
document has to be in word/pdf within 1000 words (excluding exhibits and excel sheets) in
Book Antiqua font 11.

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Exhibit 1: Payment Types in India: Source RBI

Exhibit 2: Growing Usage of Mobile Wallets: Source NPCI

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Exhibit 3: Increasing Usage of Mobile Payments in Asia and Africa: Source Statista.com

Exhibit 4: Ezetap Device and Ecosystem: Source Ezetap

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Exhibit 5: Future of Indias Payment Ecosystem: Source NPCI Axis Capital Report

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