By Monika Saha, VP Of Marketing for Zuora.
Originally published in Forbes.
Tuesday, November 8th, 2016 was a big news day for several reasons. While Americans were watching election returns, across the planet 1.2 billion people woke to discover that 86% of their cash was worthless. The Indian Government announced that all 500 and 1000 rupee notes in circulation would no longer be considered legal tender.
In the midst of all the headlines, my thoughts turned to coconut water.
One month earlier, on a trip to New Delhi to visit my parents, I found out they had “subscribed” to fresh coconut water, delivered to their doorstep every morning. A subscription to fresh coconut water? The techie in me was tempted to call it CWASS (“Coconut-Water-As-A-Service”).
It was a great example of the “Subscription Economy”, where customers prefer to consume and pay for services on a recurring basis and businesses deliver and bill for those recurring services. To me this was further proof that this wasn’t just an economic model meant only for software, movies and boxes of snacks, but a pervasive way of doing business everywhere on the planet. Even India.
But there was one interesting difference between this service and other subscription services in the West: it was a 100% cash-based model. No credit cards, debit cards, or bank transfers were accepted. This would have ordinarily been fine in a country where 90% of all transactions are cash transactions. But after November 8th, 86% of India’s currency vanished.
Many others have discussed the reasons behind the Indian Government’s decision to remove 86% of the currency from circulation, and the hardship it caused. But since my company Zuora powers hundreds of subscription businesses around the world, I was particularly interested in the effect on cash-based services. The coconut water vendor example is telling — today their website notes that deliveries are currently “on hold.”
Now, is this a permanent closure, or a bump in the road while this business figures out how to switch from cash to credit and debit cards? Millions of other vendors and consumers across the country need to cope with a suddenly “cashless” society. Fortunately, it turns out India has spent the last decade building a unique solution for just such a society.
India has gradually, but surely, created a massive infrastructure for an untapped digital economy. This technological revolution is collectively called “India Stack” – an interface that enables any business, anywhere in the world to (literally) access India through a set of APIs.
Two aspects of IndiaStack stand out when it comes to helping us understand how this might dramatically accelerate the pace of innovation in India:
1. A Digital Identity
As little as 9 years ago in 2008 India embarked on a project to provide everyone in the country a “digital identity” based on fingerprints and retina scans.
This identity follows you everywhere, is de-coupled from vertical silos created by singular merchants, and the data merchants gather from your use of various services is always associated with this identity. In other words, it acts like a Subscriber ID, enabling the same direct-to-consumer relationships that make companies like Amazon and Apple so successful.
The Indian government named this project “Aadhaar”, which translates to “foundation.” As of 2016, the program had issued verifiable 12-digit biometric identification numbers to 1.1 billion people, and this has created a foundation for a digital economy.
2. A Universal Payments Interface
With India’s Universal Payments Interface (UPI), a mobile phone can act as a credit card as well as a point-of-sale machine. You download an app and enter your digital identification (ie your subscriber identity), and your bank PIN. Everyone with a bank account can now instantly transfer money to any bank holder in India. In seconds. Most importantly, the transactions using UPI completely cut out billing processors like Visa, American Express, Mastercard who charge merchants and consumers a 2–3% fee for the service they provide.
Entrepreneurs and digitally savvy enterprises now have a whole new way to do business with their target customers, at a lower cost than other payment technologies in the west, and without all the overhead of payment processing clearinghouses.
With this digital infrastructure, India is on the cusp of leapfrogging the West when it comes to unleashing subscription economy business models. All it needs now is a wave of enterprises and entrepreneurs that can pick up the IndiaStack APIs, and plug them into every business that is targeting anyone with a thumb-print, a retina, and a bank account. Established enterprises like Microsoft and visionary start-ups like Novopay have already jumped in.
Incidentally, the developer portal for “IndiaStack” gives you a clean overview of the APIs, and ends with this enticing question … “Ready to build for 1.2 billion people?” Now that’s a tagline that the marketer in me can get behind.
Over one billion new entrants into the subscription economy are about to be created. I will be watching with baited breath, along with my tall glass of coconut water (which will hopefully once again be delivered “as-a-service” some day).
Download our free guide B2B vs B2C Subscription Payment Strategies to learn more about managing payments for recurring billing.