MUMBAI (Reuters Breakingviews) - India is set to be the first to tear down the walls around global technology giants. Entrepreneurs that helped build a new standard in affordable digital payments used locally by Alphabet, Facebook, Walmart and all the big banks, are now trying to unbundle the online market for shopping, food delivery and mobility. The initiative has the backing of IT billionaire and Infosys co-founder-turned-philanthropist Nandan Nilekani who helped design the nation’s ambitious biometric identity system, and it heralds the start of a new kind of e-commerce.
Imagine if WhatsApp or Google Maps could facilitate any web transaction. Think about ordering a taxi on the Uber app and having it fulfilled by a driver working on Lyft or another aggregator. What if a restaurant could make itself simultaneously visible to users of multiple unrelated apps like Instagram or Amazon through a simple single onboarding process, and then go on to choose which delivery partner it uses to satisfy orders based on the best price and services available. And imagine if the eye-watering fees and commissions collected by technology giants from merchants and service providers were driven down to the bare minimum too.
All of this is theoretically possible with “Beckn”, a new open-access digital infrastructure that separates the consumer and provider sides of any online service so that no one platform controls the pipe between the two ends. It raises the enticing prospect of a freer, fairer web-economy as regulators around the world fret about the power amassed by big platforms. But it also allows for super-apps to thrive. That’s just as well because western technology companies operating in India certainly have grand ambitions. Amazon is piloting a food delivery service. WhatsApp is rolling out payments.
Pilot programmes focusing on food and mobility, powered by Beckn, are quietly underway. Some have the backing of city authorities and powerful industry bodies like the National Restaurant Association of India, which represents the interests of over 500,000 food and beverage outlets. Some have also been supported by established companies like Mahindra Logistics, Google-backed Dunzo, and SoftBank Vision Fund-backed Delhivery. Most of these unpublicised trials started during the pandemic with the crisis giving stakeholders a sense of urgency: Beckn may emerge as 2021’s Robin Hood technology superstar.
Nilekani and his co-founders, Pramod Varma and Sujith Nair, are building on the innovation anchoring India’s payments system that launched in 2016. The so-called “Unified Payments Interface” (UPI) gave lenders and technology companies the ability to build apps on top of an open access, interoperable system, allowing for low-cost real-time money transfers directly between different accounts at various banks. UPI now handles over 2 billion transactions, worth as much as $52 billion, a month. In the same way UPI turned every smartphone into a bank, enabling Indians to pay for onions at a roadside stall, settle dues for goods bought online, and send money to friends and businesses, Beckn has the power to give superpowers to any app.
Taking the idea to the next level brings new challenges. Payments is a regulated industry where there was a natural body - the National Payments Corporation of India - to act as a not-for-profit entity which energised the effort to bring both sides of the market together. In this instance, trade associations and local governments may have to take the lead. Meanwhile, if popular applications like Google Maps or WhatsApp choose to get involved instead of curating third-party services for their users like Tencent’s WeChat does in China, they will have to figure out a way to adapt their interface to channel a diverse range of merchant catalogues in a user-friendly way.
Of course, big companies might choose to hold back. India’s payments system didn’t initially attract big guns like $33 billion State Bank of India or Ant-backed Paytm. They are now all users, but one of the most popular UPI applications is Walmart-owned PhonePe which was created specifically to work on the new infrastructure. PhonePe was acquired as something of an afterthought in the U.S. retailer’s acquisition of e-commerce outfit Flipkart at a $21 billion valuation in 2018: now its mooted standalone valuation is as much as $20 billion.
Beckn is in its early days and may require several iterations and revisions before it takes off. But the initiative, alongside India’s individual approach to digital payments, underscores that the country is determined to set its own path in shaping the web economy rather than following models established in America or China.
A more equitable, socialist approach also makes sense given most Indians still rely on government food rations and other subsidies. Reliance Industries, the company of India’s richest man, Mukesh Ambani, regularly emphasises its role in helping small businesses get online through its new grocery venture JioMart. Ultimately, though, instead of making small businesses internet friendly, India may make the internet small-business friendly.
- This is a Breakingviews prediction for 2021. To see more of our predictions, click here
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