Tipayment = Tip + Payment

A major problem in India is the hassle of small payments. Auto rickshaw fares in Bangalore start at Rs 25, but many auto drivers do not seem to have ever seen a five rupee note or coin! You pay Rs 30. I would be happy to give the five rupees as a tip, but now it has become an entitlement. The government seems to find it difficult to print and distribute adequate numbers of low value currency notes. Coins are equally rare. A bank branch near my residence set up a coin vending machine, but it soon broke down for good due to heavy work load!

The problem is there with larger payments as well. You return from the airport and find that the taxi driver has no change, and has no means of accepting a card payment.
 

In principle, there are digital wallets that you can use to make payments. There are few takers, however, among vehicle operators and shop keepers. Uber and Ola accept app based payments, but when are shops, traditional cabs and auto-rickshaws going to accept payments from a Universal Payment Interface? 

I believe this will not happen unless we provide an incentive for the accepters. Mere technology will not work. There is a barrier to adopting new systems, and accepters of payments will always ask what is in it for them. Why should they make the extra effort to go to a bank or an ATM? Besides many of them live hand to mouth. An auto driver usually buys 2 litres of petrol at a time. Many of them start the day with no money in their pockets.

I suggest what can be called Tipayments – payments with an assured 10% tip. I would like to see companies offering digital wallets to give customers a special interface that they can use optionally. You would enter the actual payment to be made and it would add a 10% tip and send it to the account of the acceptor. The acceptor should display his acceptor-ID prominently on his vehicle or shop. Who pays for the tip? Of course, the customer does. Now there is a visible motivation for the acceptor of the payment. He has always had an incentive. Electronic payments save him valuable time that would have been wasted in handling small change, but this time saving is intangible. On the other hand, 10% is never intangible! I propose that the accepter displays a sign saying TIPAYMENTS ACCEPTED, giving his accepter-ID. This will clearly show that a 10% tip (or service charge) will have to be paid.

Many of us would be happy to pay the 10% tip in return for getting rid of the hassle of carrying small value notes. This system will also promote financial inclusion by bringing in millions more to use the banking system regularly. 

There are several providers of wallets in India – Paytm, Airtel, MobiKwik, Citrus Pay, Oxigen, mRupee, Freecharge. They should lead the way. Banks are very cautious by nature and will think of three reasons for not doing anything till it is shown to work by others, but some day their apps will also provide for a tip! At least one wallet provider has given attention to this problem. Visit http://timesofindia.indiatimes.com/city/noida/Now-use-mobile-wallet-to-pay-for-an-auto-ride/articleshow/51174174.cms

There is a problem in this context that is worth discussion. If I am a small shop keeper or auto driver, I might agree to accept payments in digital cash and have an ID acceptable to a digital wallet provider. But, which provider should that be? Not one, but ideally a common ID that all of them recognize. Some require the customer to let his cellphone camera read a QR code, a form of a 2D-barcode. I have to say that this system does not seem to be wildly popular! A simple accepter ID could be a mobile number registered with each of the major wallet operators, and verified by sending a one-time password to that mobile number. The customer making a payment will enter the 10-digit mobile number he reads off a poster into the interface. The app will do everything else to ensure that acceptor gets a notification that the payment has been received.