Technical Blog – MMB and FMB

MMB and FMB – Who they are

Mobile hawkers and street vendors with no shop have access to mobile technologies – Tablet and Mobile.  Fixed stall vendors with shop have access to mobile plus stationary computing.  We shall refer to such businesses in this article as minibusiness. 

F-minibusiness or FMB will refer to the fixed format shops and M-minibusiness or MMB will refer to the mobile shops.

General and Provision stores, Chemist and Druggist, Medium Kiranawalas, Dudhwalas (milk vendors), Hardware shops, Electrical shops, Paint shops, Kitchenware, Houseware and other such are all examples of FMB

MMB are also those businesses who may not appear mobile as they have a stationary location but they do not operate from a fixed shop.  They occupy space on the street.  Vegetable and Fruit vendors fall in this category.  Street sellers, feriwallas, tea-stall owners and many such mobile businesses are typical examples of MMB.

In a country like India, offline big box retails chains, and online ecommerce portals will not replace the MMB and FMB.  There is scope for all to co-exist as we have seen in the last five plus years.  However, a digital economy requires all businesses including minibusinesses to adopt technology for business.

What is cashless and why go cashless

Cashless transactions are those where physical forms of currency does not change hands.  The transaction is handled cash free as making and receiving payments goes digital.  Naturally, then technology plays a part in this.  Both ends of the transaction are technology enabled.  A protocol exists for secure electronic transaction to happen. 

Cashless offers many benefits as well.  The risk of handling cash is lowered.  Regular deposit and withdrawing of cash goes away lowering thus the risk and effort involved in what we call the subsidiary transactions.  The businesses have a digital identification which helps in the authentication during the transaction.

Through government policies, necessary IT infrastructure has been in place for the mobile application companies to develop the user applications for facilitating electronic transactions and access bank accounts electronically.

Moreover, if any FMB or MMB do not have a bank account then storing cash becomes risky.  Cashless transactions not only obviates this risk but then also requires the minibusiness to open bank accounts so that electronic transactions to and from the bank account can happen seamlessly.

The near future is not a question of offline versus online, but how online can complement offline; as both will continue to thrive in different ways.  Over time, cashless will supersede cash and have a higher adoption margin than cash.

By modernising the FMBs and ensuring that business becomes better for them on the supply side and the consumer side, we will be ensuring that both customers and business owners benefit.

It is the era of digitalization and one has to be technology-updated to compete in the market.  Digitalization eases effort and management in the long run as can be seen from the proliferation of various software applications in the PC market.

Many developed countries in the world are gradually going towards cashless society at an increasing rate over the last 10 years.

Helpful to the minibusinesses is also inventory management software for FMB and MMB – scope for such software exists.  Mobile wallets are transaction management software.

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FMB and MMB and the drive to go cashless

Mobile Wallets or e-Wallets are one mechanism for FMB and MMB to go cashless and thus play a transformational role for the business.  They not only allow cashless transactions but also help to transfer money to other accounts.  One important criterion of mobile wallets is that they are secured.

From a customer’s viewpoint FMB and MMB are convenient, reduces time and saves money when buying goods.

Going cashless has additional benefits of little management of cash resulting in less transaction errors and proper maintenance of records.

After demonetisation in India, mobile wallets or e-wallets have proved to be very helpful for several vendors and shopkeepers.  In some cases, tea vendors and other street vendors are also making use of mobile wallets.

It is interesting to note that something as simple as a smartphone can be so transformational for business for MMBs and FMBs.

Some FMBs for example Chemist and Druggist have a customized inventory management software with bar code facility to track their inventories.  There is scope for other types of   FMB to adopt inventory software.  Many FMBs just like organized retail have credit and debit card facilities to facilitate payments which are classified as electronic payment systems.

Even with the proliferation of big format retail chains and ecommerce portals, FMBs like Kiranas still own 96% of the grocery market.  Kirana will adopt more digitisation and hyper localisation.  Some solutions like POS billing, payment app and back-end integration of the kirana with the wholesale suppliers ensures the customer’s needs are met at the right time. Mobile and PC applications which have the ability to scan and issue bills from a printer thus facilitating inventory management which is the next stage of evolution for the kirana and other similar FMB.

Mobile wallets on the other hand transact payments through mobile phones or tablets.  This caters to those buyers who may or may not have credit or debit card on them and also to those sellers who do not have credit / debit card facilities.

Mobile wallets allows users to pay bills without using cash.  Top off of mobile wallets can be done by connecting electronically with the user’s bank account.

Going digital has also resulted in development of apps that handle order and delivery.  When a MMB or FMB commits to going digital, they are in turn enabling the order placement and delivery handling to also go digital.  Customers can call them on their mobile to place orders, inquire about an order and complete the order at delivery and payment.  For FMBs like restaurants, going digital has given rise to certain apps that act as intermediaries between the customer and the business.  These apps are Zomato and Swiggy amongst others.  Through these apps, customers have the choice to select items from multiple vendors and have multiple orders be delivered as a single order by these intermediaries.  Wireless card swipe machine can be carried by the delivery person and on delivery payment can be made cashless, if so required.

This article mainly caters to FMB and MMB and their push towards digitization.  It does not delve into the details of developing the various mobile applications except where such details are required when describing a particular point.

Digital Economy is a key element in any country’s transformation into a smart nation and is impossible without the development of a first-class payment ecosystem that is efficient, secure and allows people to make seamless mobile transactions.  India has shown remarkable progress in this direction over the last few years.

While mostly, this article caters to the Indian minibusinesses, its applicability could be global with many developing countries push for cashless society leading to a smart nation.  Digitization aids in improving the economy of a nation.

The various mobile wallet applications discussed here are only India-based.  The choices for mobile wallet applications are - PayTM, Phone Pe, Mobikwik, Airtel Money, Oxigen, Chillr, Razorpay and others.

Mobile Wallet Applications

PayTM: Paytm is the most commonly used mobile wallet as it helps people to shop, travel, pay bills etc. It lets you send money to anyone with a mobile phone number or transfer money into any bank account. The wallet can easily be topped up using networking, credit card, debit cards and IMPS merchant payments. Its wallet partner includes BookMyshow, Uber, Makemytrip, etc.  Bank to Bank transactions are possible using PayTM.  PayTM wallet and Pay with PayTM are the services it offers.

Phone Pe: BHIM UPI based App to provide a cashless and a seamless payment experience.  From utility bills, mobile & DTH recharge, sending & requesting money, to paying credit card bill and insurance premium.  All this and more is possible on the PhonePe app.  Choose from options like BHIM UPI enabled bank account, PhonePe wallet, Debit and Credit Cards to make seamless payments daily.

Mobikwik: Mobikwik is a mobile wallet with a strong offline presence. It helps to recharge mobile phones and pay bills. It also offers to transfer money to friends and family. It’s recent “nearby feature” has helped users in identifying shopping and food outlets. Since demonetisation, many people have downloaded this app as it also shows the cash deposit locations around them with this feature. This app also offers doorstep cash collection service making it easy for users who do not have access to bank account.

Airtel Money: Airtel Money is another kind of a mobile wallet which has become popular in recent times. One can send money, pay bills or recharge and pay for the shopping. It is convenient and easy to use. Payment transactions are secured as each transaction is confirmed with your PIN code. This app gives exclusive offers and discounts. Any Indian citizen can have one account in his name. The app lets you split the expenses with your friends while shopping, eating etc by entering their phone numbers.

Oxigen Wallet: Oxigen Wallet also let users recharge mobile phone bills, pay electricity bills, shopping online etc.  Users can receive and send money with another Oxigen wallet or directly to a bank account. It can transfer money instantly and with ease. The Oxigen wallet can have a maximum of INR 10,000 per month.

Chillr: This mobile app is available exclusively for HDFC customers. This app lets you send money to anyone 24*7 without any hassle of adding beneficiaries. One can easily split money with friends, recharge mobile, buy data cards and DTH. Though other bank customers can receive money using the app. The user first has to enable the account via net banking or mobile banking. Soon the app will allow people to pay at online and offline stores.

Razorpay: Razorpay allows online businesses to accept, process and disburse digital payments through several payment modes like debit cards, credit cards, net banking, UPI and prepaid digital wallets.  Razorpay payment solutions can be integrated by both web applications and mobile applications.  Razorpay provides developer friendly API and integration process.  In September 2017, Razorpay launched four products - Route, Smart Collect, Subscriptions and Invoices, which allow businesses to manage multiple aspects of money movement including collection, reconciliation, and disbursal.

Thus, businesses can download anyone of the above applications and go cashless in few simple steps. These applications can help them ease their business.

As we have seen, some mobile applications like Razorpay provide the ability to add extensions to the application thus catering to third party developers who can further customize the app using their extension-based APIs.

The Hows of going digital for FMB and MMB

After demonetization in India, there has been traction for minibusinesses to go digital.  Basically, we are looking at three types of hardware – One is PC, second is Tablet and third is Mobile Phone.  PC software will be somewhat different than the Tablet or Mobile Phone as the PC operating system is Windows whereas Tablet and Mobile Phones have largely Android or iOS operating system.

A payment gateway processes payment in mobile applications and on websites. Mobile applications and web applications implement a payment gateway allowing payments to the merchant by securely authenticating with the customer’s bank.  It’s the best and the only way to handle online payments.

Mobile applications will need to cover the supply chain as well since if a MMB is being paid in cashless, the MMB will also need to pay its suppliers in cashless mode and this backward integration should go all the way through the MMB, the middle man and finally the producer.

If this is not handled then the MMB cannot go cashless until the supply chain also goes cashless.  Though users and businesses see the end transaction, the parts (and the payments) that are not visible are important as well.

Luckily, all infrastructure needed for mobile applications is in place.  Companies like the ones mentioned above can develop applications using this infrastructure and protocol and then these applications are available for free download to the users – both buyers and sellers.

Cashless – Adoption and Policies

Mumbai has over 250000 hawkers or MMBs.  All across India, the number could be in few crores.  In Mumbai, the annual turnover of all hawkers is approximately Rs. 1500 crore as given by the National Association of Street Vendors in India.  FMBs also could be in few crores all across India.  Their annual turnover in Mumbai is approximately Rs. 2000 crore.

There is scope for mobile applications developed by municipalities and local and state governments.  Hawker registration, domicile certificates, licence agreements, and any other such documents can be uploaded electronically by MMB.  These types of applications can be developed by the above-mentioned government branches.  MMBs can use these applications to keep themselves up-to-date with government compliance.

Government can also help by providing free WiFi access to those pockets where MMB and FMB operate.

In India, there is a third-party application called - Hawker Inspection Application - available for city government’s use.  This application which comes with RFID chip based Smartcard to differentiate between authorized and unauthorized hawkers.  With ready to use Hawker Inspection application, government officers can manage all the reports digitally that will eliminate the hassle of making paper-based reports.

Smartcard comes with RFID chip and barcode that gives accurate information about the hawker.  Inspector just has to ask for the card to hawker and scan its barcode through the app or he can also scan the card through Radio-frequency identification device. By scanning barcode and RFID chip, the inspector can verify the hawker and his complete details.  The Smartcard will help to verify the location of hawkers and check their violation reports if any.

Studies done in Thailand regarding Technology Acceptance Model (TAM) have revealed a connection between a business’s entrepreneurial orientation and technology adoption.  Thus, technology acceptance model holds true and viable for MMBs given their entrepreneurial orientation.  The more a user perceives usefulness, the more likely they are to adopt new technologies.

FMBs have higher rate of cashless transactions than cash transaction, specially after the adoption of credit card and debit card payments.  MMBs and FMBs as things stand, view cashless payments as complementary to cash payment but not a substitute for it.

The QR (Quick Response) code mobile payment method adopted by various businesses has benefitted from cost savings and efficiency.  As QR payments could be an e-wallet or funded by a credit or debit cards, consumers retain the flexibility in choosing how to fund their QR payments.

Multiple mobile applications means many different QR codes for the business as well as for the consumers.  A centralized collector will ease this pain by creating a commercially viable, interoperable and open access e-payment solution.  

Singapore has implemented a single QR code (SGQR) that is compatible with as many as 27 e-payment solutions.  Multiple payment schemes, which require merchants to accept multiple QRs, are consolidated in the SGQR.  Thus, a consumer keeps his mobile app and not have to worry about whether the vendor supports his app.  The vendor too does not have to worry if he is supporting the mobile app that the consumer is using as SGQR supports that app.

Barriers to cashless payments are mainly traditional where businesses want to stay with the familiar mode of cash payment – but proper education can easily remove this barrier.  At times there is usage barrier because of the new medium of payment but with us continuous  usage this barrier goes away as well.

Trust is an integral part in electronic payments.  Trust is when one party is confident in an exchange because of his partner’s reliability and integrity.  Trust helps extend business relationships through m-commerce and foster the growth and success of using m-commerce in business.