Payment systems

I had lunch today at a rather fancy Japanese restaurant here in Barcelona (I’ve forgotten if I wrote that blog post last year on how you get fantastic East Asian food of all kinds here). I didn’t pay a fancy price – this concept called “Menu del dia” (menu of the day), one of the very few good things instituted by General Francisco Franco meant that you can get cheap weekday lunches at most restaurants in Spain.

The above (Katsudon and beer), along with some noodle soup and two sushis and a cup of coffee, set me back by €13, which isn’t too bad by Barcelona standards (most weekday lunch platters at restaurants cost ~€10).

While eating I noticed that other patrons at the restaurant were walking up to the bar to pay the owner directly, rather than asking for the bill at the table.

So once I was done with eating and drinking, I went up to the bar to pay. The owner had seen me coming and had prepared my bill, which he presented to me. As I reached into my pocket, he got out the card swiping machine.

It might have been a shock to him when I presented a €20 bill instead, and he had to scramble to produce the change from somewhere inside the kitchen (the other patrons before me had all paid by card).

While this is one data point, it’s interesting how the economy here has moved to a situation where the default method of payment is through credit/debit card, rather than by cash (though my favourite bakery refuses to accept card for payments less than €5). The ease of card payments (most debit cards nowadays come enabled with NFC, though a fair number of merchants still insert the card to read the chip) combined with ubiquity of cards has meant that card usage has started trumping cash.

It will be interesting to see how the payments ecosystem will develop in India, which is still largely a cash economy. My belief (and hope) is that India will leapfrog credit/debit cards (as it has leapfrogged landline telephones and big box retail, moving directly to mobile phones and e-commerce) and take up electronic payments in a big way.

IMPS (immediate payment service) is already a fantastic protocol for bank-to-bank transfers, and the costs are extremely low. In April, the Unified Payment Interface (UPI) will be rolled out, which makes transfers to hitherto unknown people even easier! If our banks do a good job of implementation, there is a good chance it might get adopted widely (long back I’d made a case for the RBI to subsidise such payments).

Put Comment