We have had enough discussion about lack of a good payment gateway in India. The domain is mostly ruled by early starters like CCavenue or large business houses like Time of Money. ZaakPay is one startup trying to take this challenge head on.
ZaakPay is a Delhi based payment gateway startup founded by Upasana Taku, a Stanford graduate and an ex-product manager at Paypal, US. The startup claims to have learnt a lot from the founding team’s experience with Indian payment gateways for their earlier product, Mobikwik. ZaakPay has launched P2P money transfer to start with and will launching merchant pay very soon.
How ZaakPay Works?
1. Signup with your email ID and enter your bank details.
2. Set your daily limits and get a mandate signed from your bank to allow ZaakPay to debit your account for that amount.
3. Upload the stamped mandate for Zaakpay to verify. Once verified, you are ready to transfer funds between accounts.
Zaakpay is free for senders and charges a flat fee of Rs.10 per transaction to recipients (waived off till 1st of July). ZaakPay supports 90 banks currently and will enabling card payment by the end of next month. The team intends to release an API and support SMS/IVR payments sometime in July. Most importantly, ZaakPay allows recurring payments as well.
ZaakPay is taking a very different route to the problem and this solution to me looks like something between an online payment gateway and an e-wallet (Though Zaakpay does not hold any sender’s or receiver’s money. Money is transferred from sender’s bank account to recipient’s bank account via a nodal/escrow bank account.) On second thought, it is solving the problem of both to an extent. The only issue I see is the friction to do offline paperwork to get started.
Here’s what the founder has to say on that front:
1. If I want to change daily limit, I have to do the paper work again?
2. How is it better than netbanking? From what I see, the only advantage is that there is no transaction password needed. Isn’t that less secure?
There are only 38 netbanking banks in India. There are 90 total banks in India. Only about < 10% people have netbanking enabled on their bank accounts whereas there are 100M bank account holders in India. With a Zaakpay account (created online/offline/mobile) all these users can make payments. We are basically creating a method of payment which supports 10x user base as compared to the netbanking user base.
Benefit for netbanking users? Even these user have to got thru a 4-5 step process to complete a payment. With Zaakpay account we want to bring 1-click payments to India and thereby improve the transaction completion rate. One of the main reasons transaction success rate is so low in India is that there 4-5 steps to complete both a card payment and a netbanking payment. More steps=more failure points=more failures!
3. I am doing an e-payment and there is no confirmation/double check/2FA needed. Does RBI regulations allow this?
When u give a mandate or standing instruction to an Airtel broadband/postpaid bill payment they dont even ask u to confirm the payment. We always make a user confirm a payment by login/password. There is no 2FA requirement on ECS as far as our legal team has researched.
4. Why do you think an individual would do this instead of an NEFT?
NEFT is manual and requires you to add a beneficiary every time you want to pay. We just need the email of a person you want to send/receive money from. We believe to enjoy 1-click payment experience on web and mobile users will sign up with Zaakpay. B2B and recurring payments are also simplified by paying via Zaakpay so we hope we will attract startups, small businesses as well as consultants.
What do you think of Zaakpay? Will they pull it off?
[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He writes at The Inspire Blog]