“It’s baffling why RBI excluded PPIs from payments bank licenses” – Oxigen’s Pramod Saxena

Payments solutions provider and mobile wallet Oxigen Services was one of the 41 applicants who had applied to the Reserve Bank of India (RBI) for a payments bank licence. Although they were not in the final 11 who got the in-principle nod from the RBI to set up a payments bank, Pramod Saxena, chairman and managing director of the company tells MediaNama that the company will continue to push aggressively on the financial inclusion space. He also spoke to us on the details the RBI was looking from applicants and their foray into POS machines.

Saxena: Well our activities of building the last-mile infrastructure will be continuing. That was there even before payments bank announcement. So our core business is to create a footprint for access network where transactions, payments and also all money transfer related activities can happen. And all of this was part of our core proposal to the RBI. We really don’t understand how and what got mixed and what’s the real criteria for selection. So we will continue to build our network and hope that there will be people who want to partner with us, use our network, share our network. And under our PPI licence, we continue to do a whole lot of these activities anyway. So we’re looking to keep our push aggressively and when there’s an opportunity next time in the future, we do hope we will have this licence as well.

MediaNama: During the application process, did the RBI give any indication about what they were looking for from companies to become payments banks? 

Saxena: I would like to understand that as well! I think from the guidelines that RBI had issued, it was very clear that they were looking for an involvement in the financial inclusion space, track record, experience of people doing micro transactions. They had written about people who could handle large number of small-value transactions. We are perhaps one of the biggest players in that space as we do about 50 million transactions a month. Our gross transaction value size is also pretty large and our footprint is pretty big. So we are a bit confused as to what the RBI wanted more than what we were doing.

MediaNama: What details did the RBI ask from you when you applied for the payments bank licence? 

Saxena: They asked us details about the footprint, transactions and our presence in the country. They also asked us information regarding our promoters, my track record individually as to what I’ve been doing etc. And we provided all of the data and information.

We had also done a pilot for four months for Aadhar-based cash out which was a precursor to the payments bank licence and very few people managed to do it. We were perhaps one of the few people who demonstrated Aadhar-enabled cash out payments. So all of this information was also given.

I don’t think there was anything lacking in information. But it may be that RBI wanted to make safe bets and only give it to big players like the telecom companies. So what we found missing was the encouragement to PPIs the RBI themselves had promoted to do business in financial inclusion. It’s baffling why PPIs would be excluded.

MediaNama: Could we get some details on Oxigen’s footprint, the number of transactions, number of wallets etc? 

Saxena: We are currently doing 50 million transactions a month. We are serving 150 million customers through 130,000 connect points through Oxigen direct retail stores, chain stores customer service centres in the rural areas. Last year, we had done transactions worth Rs 9,000 crore.

In terms of mobile wallets, we have 7 million mobile wallets, but we have 100 million retail customers and our process has been to convert these customers into mobile wallet users. We have not followed the approach of getting a wallet customer by paying him money on sites through transactions.

We have also done $100 million worth of money transfer transactions in a month. Rs 600 crore is our current money transfer and banking portfolio in a month. This is money transfers from our wallet to bank accounts.

MediaNama: What is the average ticket size of the transactions from the Oxigen wallet? 

Saxena: The ticket size is about Rs 3,000. That’s because the money transfer transactions is generally on the higher side. The payment transactions like mobile and DTH recharge, bill payment, they should vary from Rs 50 to Rs 500.

MediaNama: What would you say gives Oxigen an edge over its competition? 

Saxena: Our differentiator is our footprint. We use a point of sale device which runs with a a unique application which allows all kinds of payments, including debit cards, RuPay cards. It is also biometric enabled so that you can do eKYC and do Aadhar-enabled cash out transactions through access points and we’vealso developed the back-end for it. So we have a ready system which could’ve started functioning as a payments bank from day 1 itself.

So we can clearly say that in reality that none of the players who have been given a licence have a matching infrastructure on the ground to support the last mile.

MediaNama: Could we get more details on the Aadhar-enabled cash out pilot you ran?

Saxena: The cash-out pilot was for limited period. It was for four months and was done last year in September. We had done cash out in deep rural areas of Bihar and Orissa. And cash in was done in cities like Delhi and Mumbai. We had actually achieved a high success rate of of about 93-94% on biometric authentication in rural areas. I think the RBI evaluation committee had appreciated that in the meetings we had attended where others were also present in the pilot. At that time, it was clearly said that we were the ones who had the most comprehensive and successful pilot. Again, we were at a complete loss as to why we needed to do this pilot if outsiders were going to get the payments bank licence.

I don’t have the details of the transactions, but the pilot was done to prove the efficacy of biometric enabled transactions. They were generally in the range of Rs 1,000- Rs 100. So this pilot wasn’t about large volumes, but it was about the accuracy and effectiveness of using the Aadhar to enable cash-out. Because the government is saying the direct benefit payments to go to individuals and Aadhar is the way to establish whether the recipient is actually the same person.

MediaNama: You recently had partnerships with PVR Cinemas and Coffee Day for Oxigen Wallet. What kind of partnerships can we expect in the future?

Saxena: We are continuing to build partnerships for our consumer wallet where we have realtionship with eBay, Amazon and PVR etc. We are building relationships with large ecommerce players. And we believe that our last mile infrastructure can also be used for logistics support, delivery and payments with ecommerce companies who are facing a challenge with cash-on-delivery. And we’re having talks with Amazon, Flipkart and eBay at this time for it.

MediaNama: What other innovations is Oxigen doing right now in the payments space? 

Saxena: We recently proposed a POS device to the Indian Banking Association (IBA). This is a customized device which is built keeping in mind the Indian conditions use and requirements. We bid this in competition with international companies like Ingenico and Verifone. They approved us both in terms of cost and functionality. So this device biometric enabled, it has NFC for tap-and-go payments, it supports the RuPay card and can also operate the Jan Dhan accounts for cash out from the machine. We are in discussions with banks to provide them these and this device will come packaged with Oxigen’s application so that when banks deploy these devices in stores for card transactions, they can also do other cash related transactions.

We want to provide this to regional rural banks and co-operative banks who otherwise have no other access points. Our POS machine is priced around Rs 18,000 and we are looking to deploy 500,000 machines to be deployed over the next couple of years.