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VISA vs Paypal – Will Visa’s new payment service succeed in India

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By- Staff Reporter | Date- March 19, 2011

After the RBI vs PayPal row that evoked nationwide dissatisfaction amongst freelancers and small scale IT service providers, there seems to be an interesting development in online money transfer world with Visa, PayPal’s own partner, announcing of a new person-to-person payment service. This new service from Visa would allow anyone who has an account in a participating bank to send payments directly to any Visa account, whether it be a credit or debit account. To send a payment, all that the payer needs to know are the payee’s 16-digit Visa account number, e-mail address or phone number. Once the payment is sent, it would show up in the users account and the payee can withdraw the amount. For this, Visa has partnered with CashEdge and Fiserv to handle the person-to-person transactions and make technical changes to its network back end.

Visa has stated that this payment service should be available from participating financial institutions from later part of the current year, however it has not disclosed anything regarding transaction fees, currency conversion rates or if there are any limits to funds to be transferred. This new announcement has already been considered throughout the globe as a rival to PayPal’s service, which had been long been considered as one of the favorites especially in India. But for Visa to compete against the current providers of such service in India such as PayPal, it would have to take into consideration various issues such as currency conversion rates (for Cross border transfers), percentage of amounts which their partner Banks would charge, transaction charges, etc. Another very important factor would be to what scale the Indian partner Banks would allow small scale service providers, freelancers and merchants to open merchant accounts in their banks for using the Visa service. In current days at least, it is nearly impossible for Indian merchants to open merchant accounts in banks which usually tie up with Visa.

The market which Visa would be targeting in India would obviously be of the IT world,- freelancers, small scale IT developers, etc. These are the primary potential customers to use the services, as a huge majority of Indian foreign earnings comes from these IT and IT- enabled enterprises. This entire market has been dominated by PayPal primarily because of its credibility with foreign customers who uses services of Indian merchants and customer service which is better than most other players in this sector. In spite of many foul plays by PayPal with its Indian customers (as reported in Times of Assam on several previous occasions), it still enjoys a huge public support and sympathy post its issues with new RBI guidelines which are a definite blow on Indian freelancers. For Visa to succeed with its proposed services in India, the most important factor would be what guidelines and rules are set by the Reserve Bank of India, who of late has acting only as a dictator with setting policies set to kill freelancers.

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VISA vs Paypal – Will Visa’s new payment service succeed in India

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