deepakshenoy

Cheers

Banking payments are never useful to charge progressively. Always, one part of the banking system subsidises the other, so some players will pay for others, some borrowers will pay higher for others to get lower rates etc. Banking is not a bunch of silos, it's fungible, interconnected, dependant activities. Usage based fees are not good; you want people to transact more so you can earn more float income on average rather than nickle and dime out fees from a few and this reduce growth. The float income pays for everything and much much more, so no point doing usage based fees

Small merchants will ditch UPI

Tiered just doesn't help if you want to encourage growth...it caps growth. Only very few large merchants will pay who already pay for debit or credit cards. Many of them pay for UPI anyhow as gateways charge a platform fee.

Banks are paid by float for all payments including neft, cheques and cash atm, all of which are free for small amounts and UPI is defined as a small amount. When float income stops then it makes sense to think of charging for upi.

A freemium service can already be built with a payment escrow for anti fraud protection, for willing merchants and customers. Fighting fraud is useful for banks to invest regardless of whether it's UPI or not, I'm not sure if you need separate models for UPI. Request abuse is pretty easy to track i imagine, for any bank or even for npci...and npci has a big profit pool.

Indeed internet shutdowns are a problem but i think the state will have to move out of shutdowns as UPI gets popular. You are right, that is a pain.

Thanks very much! I would love to hear your comments.

I think UPI is incredible and well loved because it's free - putting a toll on something moving at this insane speed is just going to slow it down tremendously.

IRCTC is still the biggest ecom site despite their UX and UI and all that; it simply solves a problem people want solved more than all the other stuff. India's ecom isn't about the fluff and the sub-millisecond response time; it's just about doing something right, and the success stories like Naukri or IRCTC or whatever have gone that route.

RBI isn't limiting stuff for no reason - multi factor makes Indian CC sites a much better alternative than abroad, honestly, where you can get overbilled and then have to go to court/claim etc.

Merchant account and TDRs are negotiable, anything above Rs. 100,000 a month ($2,000) can get you below 3%.

Logistics aren't such a bad deal - have worked with vendors who now have great options and assurances for ecommerce players.

Indians feel guilty for exuberance? I disagree. Having lived in Delhi and Mumbai and Bangalore, I see no end of ostentatiousness (if there is such a word).

The arrest on posting online is being addressed, and the law is ill-thought-out and if we put heads together, we can change things.

People pay in cash: so what. They will buy online if you give them stuff cheaper. If ECom sites stupidly decide to charge near-market rates, and they will die. It's cheap (in price) that works, and if you are that, they will pay you in whatever way you want -- cheque, cash, card etc. (See IRCTC: they don't take cash online, they don't do CoD, yet...)

Vijay's article has the correct tone that we should focus more on customers than investors. However, you need money to make money, sometimes the customer who wants you is a customer you just can't reach, because you don't have the money to show him your wares. And thinking "big" is now possible because there is money available for the investment, instead of waiting for organic growth.

Thanks - I wrote the original post (http://capitalmind.in/2012/03/angel-investors-beware-funding...) and have a few more that the recent Budget has introduced, at http://capitalmind.in/category/startups/startuptax/

They can, but that hurts if you make any real revenue. If I invest $100 in a business, it spends the $100 but makes $60 as revenue, then the $40 is a loss. (And can be offset by profits in future years)

With this new clause, the calculation will be: income = $100 (investment) + $60 (revenue) = $160. Expenses = $100, profit = $60, and you'll pay tax.

It's like taking a loan from the bank and being taxed on the money as income. You still have to pay the whole thing back! (Effectively, any equity investment is a "liability" on the books; any investor will demand return on his whole investment, not just the portion that wasn't paid as tax)

kerosene.