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@GerardHergenroeder:

+ 1. Banks may or may not do better digital than fintechs but they surely do more with digital than fintechs.

Ever since my bank launched its mobile wallet, it has become my go-to method of payment, ahead of the fintech mobile wallet I used to use before. HDFC Bank's PayZapp Ends My Bill Payment Woes  

One question: Fintechs use VC funding to offer digital services, even at a huge loss. As traction increases, their paper valuation goes up. VCs exit at handsome profits during the next round of funding. Everyone is happy. Life goes on, seemingly forever. In your experience in payments, will banks use their huge profits to fund similar loss-making digital services forever?

"Uber for example accepts cash in India such is the nature of the economy there."

Uh oh let's not jump to conclusions about economy of nations based on what one company does or does not. India has >600M payment cards. Uber's customer base is 10M in India. So there are 60 cards for every Uber customer in India. Uber's acceptance of cash has nothing to do with economy. 

When Uber entered India, it didn't accept cash. Its target audience had cards and, like their brethren elsewhere in the world, liked the frictionless payment experience whereby the card account was debited automatically, with the rider having to do nothing at the end of the ride. However, "invisible payment" of this nature violated the Indian regulator's two factor authentication mandate for card payments. Uber was told to change its card acceptance procedure to comply with 2FA. Since 2FA causes friction, Uber decided to stop accepting cards altogether and started accepting cash in India. Uber went back to the drawing board and found a way to accept cards that complied with 2FA, still avoided the traditional 2FA friction. After its relaunch, card payments on Uber India work as follows: Riders still walk out at the end of the ride without doing anything. But they must make the payment via 2FA - or, if that fails, by cash or linked mobile wallet - before they book their next ride.

In short, Uber gives credit until the next ride. I doubt if Uber takes this kind of credit risk anywhere else in the world. That, to me, says something about the Indian economy.

@ChetanGhadge:

You hit the nail on the head when you say it all depends "upon the amount and your risk appetite". The amount is INR 300K and this post is about putting a monetary value to risk appetite.

I certainly don't have the risk appetite to attempt an INR 300K payment again in the hope that my bank - even assuming it's HDFC Bank - will cancel the first transaction when the second one comes for settlement. More so because there have been times when I've got the merchant acknowledgment's of successful payment but I haven't got the transaction confirmation SMS from the issuer bank - especially if it's HDFC Bank.

@ShajuNair: 18% success rate? Gasp! That's scary!!

@AlexanderPeschkoff: LOL:)

Nice post but, in all fairness, let me cite another example from the same transportation industry. Forget luxury industry to which Four Seasons belongs, this brand comes from an industry that’s even more downmarket compared to airlines. I have a problem. I tweet a complaint. I get a response in 4 minutes. The problem is resolved in 3 hours. All of this while we’re in motion. Name of the brand and other details can be found in my blog post titled Why Social Media Has Become My First Port Of Call For Customer Service (hyperlink removed to comply with Finextra Community Rules but this post will appear on top of Google Search results when searched by its title).

Okay, I was just trying to get a feel of the overall probability of the use case for which a cardless cash product would have a compelling value proposition. TBH, it seems to be extremely tiny. IMO, banks should scrap cardless cash offerings and spend the money saved on amping up the marketing of their regular cashless card / app products. Hardly matters whether or not they take the unsolicited advice I gave in Five Ways For Banks To Boost Credit Card Use for doing so. I say this despite believing that The Death Of Cash Is At Least 190 Years Away.

From my personal experience of living in London, I couldn't agree more. But I'm still curious about one thing: By the time you decided to go to the supermarket, you knew you didn't have your purse. How had you planned to pay for your goods?

I agree that banks must have a robust marketing strategy in place to spread awareness of the feature set of all their offerings. But I hope they skip the "left wallet at home" messaging. I find it terribly old, trite and contrived and Reason # 2 for why mobile wallets have failed to go mainstream a decade after they entered the market. (Reason #1: Plastic is not broken). There are so many things in a typical wallet apart from cash and payment cards, as I'd highlighted in Mobile Wallets: Fix What's Broken - And It Ain't Payments. Keen on knowing how you got past half the day through to lunch without realizing that you'd left your purse at home?

On a side note, IMO, cashless card is the future of payments. Cardless cash may win awards for apps but it's a solution looking for a problem for all but a tiny customer segment.

Good grief. What else will lenders need to do next? (1) Explain all terms and conditions in plain English? (2) Conduct a quiz in the middle of the application process to prove that only customers who passed with flying colors were approved for the loan? I can bet that it will be faster to fill a paper form in a branch if customers are subjected to do all this online.