Is There Any Indian App To Store Your Indian Loyalty Cards Digitally?

January 12th, 2018

I recently read the following question on Quora:

Is there any app that helps to store all your loyalty cards digitally?

I am looking for an app which is India based or atleast caters to the Indian market.

Someone once said that, on Quora, you answer the question that’s asked, the question that’s not asked, and the question that should be asked.

When I read this question, my first reaction was to wax eloquent about an Indian app that stores all loyalty cards in the world digitally. After doing a quick reality check, I felt that was a bit of wishful thinking and decided to restrict myself to the question that was asked.

Given below is a lightly edited version of my answer.

What the OP is asking for is a “mobile loyalty wallet”, an app that lets consumers scan their plastic loyalty cards into their smartphone. By digitizing physical cards, a mobile loyalty wallet saves consumers the trouble of having to carry all their physical cards in their wallets and ensures that they never lose out on rewards when they shop at a store whose loyalty card they’ve forgotten to carry with them. A mobile loyalty wallet shouldn’t be confused with “mobile wallet”, which stores credit and debit cards digitally and is used to make payments with a mobile device.

I’m a happy user of KeyRing app for several years. The maker of this app gives its location as Dallas, TX, in the USA.

Apple Wallet (previously known as Passbook) is another similar app. It’s also Made in USA.

From time to time, I’ve come across a couple of Indian mobile loyalty wallets when their founders reached out to me seeking angel investment. I’ve forgotten their names. All I can remember about them is that, their UX uniformly sucked and I deleted them within a week. When they sought my feedback, I referred their founders to KeyRing and Apple Wallet as a source of inspiration for making their apps more frictionless. Like founders of most Indian startups – barring the ones founded by IITians – they ignored my feedback and tried to teach me how to hold the camera while scanning the card and many other things I now forget. At this point, I don’t have any Indian mobile loyalty wallets to recommend.

But that shouldn’t matter. Because, regardless of its country of origin, a mobile loyalty wallet app lets you digitize your loyalty cards from any country by simply scanning the barcode on the card or, if the card doesn’t have a barcode, by clicking a picture of the front and back of the card.

Like I’ve onboarded the loyalty card of the Indian QSR chain Mast Kalandar on my American KeyRing app.

From there on, whenever you’re shopping, you reach the checkout, fire up the app, select the said retailer’s card and flash your smartphone screen at the retailer’s POS machine (iOS Passport does all this automatically, probably based on LBS technology). If the retailer has the technology to scan the digital card off of your smartphone screen, you’d have extracted the full value from your mobile loyalty wallet. If not, you’d need to read out the card number manually and the checkout clerk would need to enter it manually into their POS system. In this case, you wouldn’t have used the full capability of your mobile loyalty wallet.

In the several years that I’ve been using KeyRing, I haven’t come across a single retailer in India who can scan the card from the smartphone. As a result, I’ve never been able to put my mobile loyalty wallet to full use in India.

This is not only true of KeyRing and Apple Wallet but also of all the Indian mobile loyalty wallets I’ve deleted.

Over time, the very mobile loyalty wallet category has lost its shine in India – thank God I didn’t invest in any of them! That’s because retailers have increasingly started using the customer’s mobile phone number as a proxy for the loyalty program member ID. While many retailers continue to issue plastic loyalty cards, that’s largely for branding purposes.

The way it works at many stores now, customers finish their shopping, reach checkout, and earn points by verbally quoting their mobile phone # to the billing clerk. There’s no need to show the plastic card and hence no need for a mobile loyalty wallet to earn points.

Many retailers also permit customers to redeem their points by speaking out their mobile phone # at checkout. So even redemption does not require the plastic card or mobile loyalty wallet. The few security-conscious retailers that insist on the plastic card for redemption won’t anyway be able to accept a mobile loyalty wallet because they can only scan the magstripe on the physical card.

Therefore, the usage frequency of plastic loyalty cards – and the value proposition of a mobile loyalty wallet – have dropped drastically in recent times in India.

People share their mobile phone numbers freely in India. Since the OP’s question pertained to India, I could conveniently assume that a retailer can get the customer’s mobile phone number and substitute it for loyalty program member ID.

In a global context, this assumption is not valid. Consumers don’t disclose their mobile phone numbers that freely in USA, UK and many other countries. Loyalty membership numbers embossed on plastic loyalty cards are still required to earn and redeem reward points – retailers can’t replace them so easily with mobile phone numbers. Ergo, the value proposition of mobile loyalty wallet is still intact in those markets.

AXA Fizzy – The New Kid On The Blockchain

January 5th, 2018

I’ve been asked many times to write about my Blockchain experience. That is not strictly true. I’ve been asked only twice, most recently by a man in Mumbai, Maharashtra.

How can I write about the Blockchain experience, I asked myself on the Deccan Queen returning to Pune, when most of the founders of the Blockchain companies are too busy writing white papers and running ICOs to develop their dApps and the few of them that have launched their dApps are too daunted by their UIs to let anyone other than their Blockchain programmers use them?


(Fans of Joseph Heller might find a striking resemblance between the above paragraphs and the opening paragraphs of Good As Gold, one of my all time favorite novels. I apologize in advance to the Estate of Heller for taking the liberty of paraphrasing what’s one of the most captivating novel starts that I’ve ever read.)

All that changed when I read about AXA Fizzy on Finextra a couple of months ago.

Fizzy is a blockchain-based “parametric insurance” product that pays out compensation for flights delayed beyond two hours. It’s already live – you can buy a policy right now if you have a valid ticket on a CDG-USA sector (or so it says on the website – as an ex-Frankfurt resident and Lufthansa Miles & More member, I’m more likely to transit to the US via FRA, which will exclude me from the target audience of the product that’s currently available only for flights to and from CDG).

I was stunned when I first first heard of AXA Fizzy.

Let me explain why.

When I lived in Frankfurt, I’d booked a holiday to Paris for my family. Memory serves, it was via While making the booking, I’d forgotten to uncheck the box next to “Kaufen Reiseversicherung” (buy travel insurance). As a result, I’d unwittingly bought travel insurance. As luck would have it, a day before we were to fly out, one of my family members had a stomach upset. We had to cancel the trip. I thanked my stars for thrusting travel insurance upon me and assumed that, now that Expedia was alerted of my cancellation, it’d process my refund of airfare and hotel charges automatically.

How naive I was.

The process to claim my insured money back was highly cumbersome.

First, there was the question of eligibility. Like any insurance product, Expedia’s travel insurance policy also came with its own list of inclusions (items covered under the policy) and exclusions (items not covered under the policy). It’s hard enough to understand insurance fineprint in English. It was virtually impossible to do it with my then level of proficiency in German. Thankfully, there were many native German-speaking coworkers in my office. I could take their help in combing through the German-language insurance contract and ascertain that the reason for my cancellation was indeed included in the policy – under the “serious illness of one of the travelers” risk.

Then came the claim procedure. I had to write a justification for my cancellation in German and attach a medical certificate from an Expedia-empanelled doctor certifying that my family member was too ill to travel.

When I got past that, I faced a few more hurdles that I don’t recall now, since all of this happened nearly 15 years ago.

Long story short, I had to jump through so many hoops to get my money back that I vowed to myself that I’d never buy travel insurance again. And never did in the following decade and a half.

But I might break my promise because of AXA Fizzy.

The way it works, AXA Fizzy checks flight arrival times published in the public domain (, if my guess is right). If the flight is delayed by two hours or more, it automatically pays out the predetermined compensation to the credit card used to buy the insurance.

AXA Fizzy doesn’t make claim process frictionless. It eliminates it altogether.

It doesn’t have any exclusions. As its website says, “NO EXCLUSION: We cover you, whatever the cause of your delay : Snow, strike,”… even “alien attack…”!

With these key differentiators, AXA Fizzy raises the appeal of travel insurance to the next level, which could potentially create a manifold increase in the size of the market for travel insurance products. Especially after it expands worldwide this year and adds flight cancellation, lost baggage and other travel-related products to its portfolio of offerings.

Ergo AXA Fizzy is stunning.

Now, that’s the marketer in me talking.

Then the techie in me started wondering what stopped someone from developing a similar flight delay insurance product on a traditional centralized database architecture (as against the decentralized Blockchain architecture used by AXA Fizzy).

I took this up on Finextra by posing the following question:

On a side note, can anyone throw some light on the dependency of such an insurance product on Blockchain. Is there any intrinsic shortcoming with a centralized database architecture that compels one to launch this product only on the distributed database architecture facilitated by Blockchain?

I didn’t get any reply.

I forgot about my question until I read “Blockchains vs Centralized Databases”. In this article, author Gideon Greenspan of MultiChain compares the traditional centralized database architecture with the decentralized database Blockchain architecture and asserts that whatever you can do on a Blockchain you can also do on a centralized database. “In terms of the types of data that can be stored, and the transactions that can be performed on that data, blockchains don’t do anything new.”, he adds.

After reading this, my question started haunting me whenever I read anything about Blockchain and dApps. I couldn’t ignore it anymore and raised it on a few other forums.

I started getting replies from a few Blockchain pioneers, including a detailed one from Gjermund Bjaanes, author of a brilliant article titled Understanding Ethereum Smart Contracts.

The overall takeaway from my interactions with all of them is:

  • If you need Confidentiality and Performance, select Centralized Database.
  • If you need Trustlessness and Robustness, go for Blockchain.

In a follow on post, I’ll share my thoughts on how these general guidelines play out in the specific context of a B2C product like AXA Fizzy. Watch this space!

Meanwhile, please feel free to share your thoughts in the comments below.

Season’s Greetings!

January 1st, 2018

Season’s Greetings and Best Wishes for a Joyous New Year 2018.

Welcome back to GTM360 Blog!

We’re happy to inform readers that 2017 was a blockbuster year, with a near doubling of traffic and an all- time high level of engagement via comments and one-on-one feedback.

Here’s the list of Top 10 Most Popular Posts on GTM360 Blog in 2017:

#10. Quantifying The Risk Of Online Payment Failure

#9. Why Branch And Digital Channels Will Coexist Forever

#8. How To Fight Card Payment Surcharge And Take #CashlessIndia To Next Level

#7. Uber Creates Loyalty To The Deal But Not For The Brand

#6. Reliance Jio – All Good Things Don’t Come To An End, They Just Stop Being Free

#5. Why Social Media Has Become My First Port Of Call For Customer Service

#4. How Relevant Is “Crossing The Chasm” After 25 Years?

#3. Mastering Targeted Offers – The Uber Way

#2. Why COD Still Rules Ecommerce In India

And the most popular post of 2017 was:

#1. Five Reasons Why PayTM Is Miles Ahead Of Its Competition

GTM360 Blog stands on the pillars of WordPress, PowerPoint, IrfanView, Pixel Ruler, etc. Our heartfelt gratitude to these applications.

We thank you for your continued interest in GTM360 and look forward to deepening our engagement with you in 2018.

Feature Or Bug – Facebook & Tideplus

December 22nd, 2017

Uber has been making targeted offers for a long time. As I highlighted in my post titled Mastering Targeted Offers – The Uber Way, some people get an offer, others don’t. As a result, two cohorts of riders can see two different prices for the same ride. In the early days, the price difference was attributed to a bug. But, as customers learned that Uber makes targeted offers at the level of individual riders, they began to recognize the disparity for the feature that it really is.

As brands increasingly adopt personalization in their communications, what you see is not what I see. At first blush, it might seem that the difference is caused by a bug in brand websites, apps or messages. But, if we dig deep, we might start getting the feeling that the discrepancy is perhaps driven by a conscious action taken by the brand i.e. feature.

This post is about “what you see is not what I see” or what I call #FeatureOrBug.

Since #FeatureOrBug is introduced by the brand owner, it obviously favors the brand. As we’ll soon see, it increases engagement, decreases cost, pumps up sales and delivers other benefits to the brand owner.

As for the consumer, there are three degrees of #FeatureOrBug:

  1. Favorable
  2. Neutral
  3. Unfavorable

Consumers will probably like a first degree #FeatureOrBug. Therefore, it boosts customer loyalty.

Consumers are indifferent to a second degree #FeatureOrBug. In the worst case, they may be somewhat ticked off by it. But it still won’t affect their engagement with the brand in the future. Accordingly, a second degree #FeatureOrBug is neutral to customer loyalty.

Consumers are antagonized by a third degree #FeatureOrBug. As a result, it adversely impacts customer loyalty.

In this post, I’ll illustrate the three degrees of #FeatureOrBug with one example of each.

#1. FACEBOOK CHECKIN – Favorable #FeatureOrBug

I saw the following update on my Facebook Feed.

If you notice the text carefully, it reads “Vikesh Mehta was drinking having breakfast…”.

Wot? Drinking breakfast?

Tongue in cheek, I replied, “I’ve heard of “liquid lunch”. Now “liquid” has started from breakfast itself, eh?:)”.

My friend thought it was a bug, reasoning that FB had tagged the said eatery as a coffee shop, thus forcing the status to begin with “drinking”.

I wasn’t so sure.

I’ve seen many such Facebook updates in the past. I didn’t know they were called FB Checkin and I’ve never reacted to one before. Both of that changed after I read this update. By displaying it in the manner that it did on this occasion, Facebook created awareness and generated engagement for Checkin. Ergo, it was probably a feature rather than a bug. Since I was happy to learn about a new Facebook “product”, this #FeatureOrBug was favorable to me.

#2. TIDEPLUS – Neutral #FeatureOrBug

The leading detergent brand TIDEplus recently ran a promo. You had to locate a code on the product’s pouch and enter it on PayTM’s website to earn a cashback on your PayTM wallet.

It was hard to find the code. But I located it finally on the inner surface of the detergent’s pouch.

I entered the code on PayTM’s website, only to be informed that the offer had already expired.

I naturally felt shortchanged.

I inferred one of the following two things from this exercise:

  • TIDEplus expected to sell a certain number of products on offer (“offer packs”) during the offer period and shipped that quantity to the trade. But actual sales were lower than expected. As a result, many offer packs were still left on the shelves – one of which was the one I’d purchased. In an ideal world, a company would go back to the trade and recall all unsold offer packs. But, in the real world, I don’t know a single corporate paragon of virtue that does that and I don’t expect P&G, the owner of TIDEplus, to be the exception.


  • TIDEplus deliberately dumped more offer packs than it expected to sell during the offer period, hoping to capitalize on the strong possibility that the offer would attract a lot of additional consumers out of which only a few would bother to redeem it and fewer still would complain when they found out that the offer had expired by then. This is a shady practice. Notwithstanding the number of brands who follow it – and there are many – this practice tarnishes the brand image.

Since I’d no way of knowing which of the two things had really happened, I gave the benefit of doubt to the brand. While I’m now a little wary of TIDEplus, I’m not upset that badly that I’ll stop buying the product in future.

On a side note, sophisticated CEM solutions are now available that help brands estimate in advance how much sales uplift they can get by running a certain customer engagement program. One of our customers has such a solution. Brand managers who need help in this space can feel free to contact us.

The next installment of this post will feature a third degree #FeatureOrBug.

Spoiler Alert: Some #FeatureOrBug shenanigans can turn a brand advocate to an ex-customer.

Watch this space!

Lessons For Marketing From Spectacular Comeback Of QR Codes Via Mobile Payments

December 15th, 2017

It’s still raining QR codes!

All leading mobile payment products in the world use QR codes. This includes Alipay and WeChat Pay in China, PayTM and PayZapp in India and Starbucks App in the United States.

QR code has been popular in China for the last 4-5 years.

In India, the nineties-era technology has become very visible in the last one year, driven by its use in leading digital payment products that got a huge stimulus on the back of the demonetization of high value currency notes a little over a year ago.

I often joke that QR code would easily qualify for “Graphic of the Year Award”, if such a category existed.

As regular readers of this blog would know, I’ve been tracking QR codes in advertising and allied areas for many years. The caption of the above picture is an obvious reference to this post I wrote four years ago on the ubiquity of QR codes in newspapers, magazines, posters and billboards.

I continued with that pursuit by checking out around ten QR codes in print and outdoor ads over the last twelve months.

Each of them ticked the following three basic boxes:

  1. Scans on a wide range of smartphone cameras
  2. Drives a natural transition from print / online / TV to mobile
  3. Microsite is mobile-optimized

A couple of them went further and supported the following advanced features:

  1. CTA can be conveniently performed on a smartphone
  2. CTA exploits the power of the smartphone

This is a huge improvement over QR codes of the past that would fail to scan or lead to non mobile-optimized websites.

I wish I could say the same thing about their engagement levels. Let me explain that with the following three examples.


The leading private sector insurer of India published a QR code in a newspaper ad that occupied a prominent spot at the top of the page.

The CTA for the QR code was “Scan this QR code to know why term plans are a must have”.

The ad was dated 12 December 2016, which was four days after #CurrencySwitch happened. The visibility of QR code had already jumped up.

However, the QR code on this ad received only one scan (probably mine!).

#2. SAP (Print Ad)

The world’s largest enterprise software company gave a gentle reminder about GST in a newspaper ad and added a QR code for more information. For the uninitiated, GST stands for “Goods and Services Tax”, which was introduced in India last July.

Despite the fact that the ad occupied a full page, the QR code in it received only one scan (again probably mine!).

#3. SPLASH (Outdoor Sign)

Splash, the Zara of Middle East, has a floor-to-ceiling QR code at the entrance to its store in a large mall.

Despite the fact that this huge QR code has been around for several years in a high footfall area, it has received only double-digit scans.

Scan volumes of QR codes are low uniformly across print and outdoor ads in both B2C and B2B realms.

Traditionally, the tepid response to QR code has been attributed to low awareness of the technology. That factor is no longer applicable. Thanks to the widespread use of the technology in digital payments, QR code has virtually become a household name in the last 1-2 years.

Why, then, are QR codes still receiving lukewarm reception in advertising?

IMO, it’s because of the context in which they’re used.

QR code works very well when it forms an integral part of a workflow i.e. it’s used to do something, like completing a mobile payment transaction. However, it does not work so well when it’s used as the source of advertising information.

Does it mean marketers should stop using QR codes?

Not at all.

But it does suggest that they should find ways to use them differently. Instead of attaching them to ads, posters and billboards as a passive information resource, marketers can multiply the effectiveness of QR codes by inserting them into advertising and marketing CTAs. The sweepstake workflow is one case in point. There are other compelling use cases of QR codes in our QR360 Framework (PDF 730KB).

The spectacular comeback of QR code via mobile payments has validated the basic value proposition of the technology and pointed the way to where it works best. Advertisers and marketers are now well set to deploy them in the right context in order to drive engagement, improve conversion rates and get more bang for the marketing buck.

A Killer Feature For PFM On The Eve Of PSD2

December 8th, 2017

Personal Finance Managers and Mobile Money Management Apps (herewith “PFM”) have been around for over a decade. So far, PFM has focused on budgeting by offering tips to save money on everyday expenses such as the proverbial $5 coffee. For reasons highlighted in Innovative Fintechs Don’t Need No Open Banking Regulation, PFM’s value proposition has so far been disproportionate to the level of account access it has demanded. On top of that, it has called for change in behavior.

Changing consumer behavior is hard in any product category. But it’s virtually impossible in PFM because consumers think the category can add a lot of value on top of their existing behavior. IMO, this explains the lukewarm reception received by PFM so far.

Will PSD 2 / Open Banking change this?

That depends on how well PFM uses the new regulation to enhance its value proposition.

I can think of at least two ways for PFM to do that.

First, do what customers are asking for.

Second, exceed customer’s expectations.

Here’s a partial wishlist of what customers and prospective customers are expecting from PFM:

  1. Earn $$$ by sweeping X amount from a checking account to a savings product – My blog post Innovative Fintechs Don’t Need No Open Banking Regulation
  2. “Moven are not telling me that, by moving credit card with provider X to provider Y, I would be Z pounds a year better off based upon my usual behaviour. That would really add some value.” – Comment from anonymous Finextra Member on “HSBC moves into open banking
  3. “Not generic offers, but ones that use your data to *show* you how much a service saves (or makes) you.” – Bradley Leimer via Twitter.

As you can see, the common theme is, make money by capitalizing upon external factors.

If PFM can uncover ways to help consumers to do this without needing them to change their behavior, its value proposition will go up one level.

With the kind of banking information that would be available under PSD2, it should be easy for PFM to deliver personalized offers that make (or save) money for its users.

Until recently, I thought that was all PFM could do.

But I changed my mind after a recent experience with my Mobile Network Operator.

My current mobile phone connection was given to me by my then employer 15 years ago. When I quit that company, I transferred the connection to my personal name for the sake of continuity. I use it now exclusively for business and charge it to my company’s account. The bills started attracting 18% Goods and Service Tax from 1 July 2017. As a B2C connection, the tax was a net cost. I heard that B2B connections were eligible to reclaim the tax by way of Input Tax Credit. In other words, I’d be able to earn a few $$ by transferring the connection to my company’s name.

I approached the MNO for the transfer. I was asked to cancel the connection on my personal name, place a purchase order for the same number from my company’s name, and fulfill KYC for my company. The entire process took three visits to the MNO’s store, two visits of its representative to my office for doing physical verification and tons of documentation.

Long story short, the transfer proved to be far more cumbersome than I’d anticipated.

I’ve one more connection in my personal name but I’ve decided to forego the money-making opportunity because it’s not worth the hassle of transferring it to my company name.

This is when it struck me that PFM-like technology could help execute the transfer.

I had a repeat of this epiphany moment a few days later when my credit card issuing bank called me to offer a free upgrade to another credit card that provided more rewards. This mirrors #2 in the above wishlist, just that the opportunity to make money was surfaced by a bank and not PFM. I’ve placed my existing credit card on file with my website hosting provider and many other merchants who follow recurring billing for the services they provide to me on an ongoing basis. If I change my credit card, I’d have to update my card on file with all of them. I thought that’s too much trouble and declined my bank’s offer.

If only PFM changed my card on file with all those merchants. I’d accept my bank’s personalized offer in a jiffy.

It’s not just this MNO or this bank.

With the constant closure of branches and dumbing down of remote channel staff, changing plans and service providers has become very painful.

I’m sure many readers regularly come across opportunities to make / save $-$$ by switching from one product / plan to another or $$-$$$ by switching from one service provider. I’m equally sure that they let many of those opportunities pass because of inertia, lack of time or the disproportionate amount of efforts required to actually effect the switch – remember the old saying about switching banks being more painful than root canal surgery?

If only PFM does the heavy lifting by switching the product, plan, and service provider on our behalf.

This would surely be a killer feature.

By executing its recommendations automatically, PFM can take its value proposition to a totally different league.

I’m not sure whether the access provided by PSD2 will be sufficient for PFM to execute all of its recommendations entirely automatically. To that extent, I may just be eating my own dog food by being aspirational.

But I do believe there are many recommendations that could be executed by PFM with little or no user intervention. Take the one about switching credit cards described above. With the account access provided by PSD2, it can’t be rocket science for PFM to parse through my transaction history, figure out who are the merchants automatically charging my existing credit card, and update my new card on file with them.

By delivering this killer feature, PFM should be able to charge a fees equivalent to a certain percentage of the gain it delivers to its customers. This would provide PFM providers with a sustainable business model.

How Much Should You Charge For Lifetime Access Of Your SAAS Software?

December 1st, 2017

As I highlighted in my blog post titled SAAS – What’s In It For Vendors?, the total recurring costs of a SAAS software often exceeds the upfront cost of an equivalent onpremise software after 2-3 years from date of purchase of the software. Many buyers are cottoning on to this lately.

Charging SAAS subscriptions to credit cards and expensing them has become a thing of the past. According to Ben Horowitz, cofounder and general partner of the venture capital firm Andreessen Horowitz, the formerly rampant practice has actually become a firing offence in many companies nowadays. SAAS has become like any other item bought by a company and subject to the cumbersome invoice approval process.

The combination of these two factors is driving many prospects to demand a onetime fee for lifetime access of  SAAS software.

This in turn is making SAAS vendors wonder whether to agree to their prospect’s demand and, if yes, how much to charge for lifetime access. The OP of the following question on Quora is a case in point.

How much should I charge for a lifetime access to my SaaS that costs $100 per month?

The natural reaction of many SAAS vendors is to reject the prospect’s request: After all, who’d want to provide unlimited service for a limited fee?

Not surprisingly, many people have encouraged this reaction in their answers.

I’m going to go against the tide. In this post, I’ll be making the case for SAAS vendors – especially those in the growth phase – to accept their prospect’s demand.

Not only because it’s inevitable but also because, if you don’t, your prospect might find another vendor who does.

Ditto even if your existing customers make a similar demand. If you decline, you’d be running the risk that they’d churn out to a competitor once their contract with you ends at the end of the month, or at most, year.

Of course, in this same post, I’m also going to tell you how to make money by providing lifetime access for a onetime fee.

Before doing that, let me take you back in time and tell you a small story.

Many years ago, 3M used to sell floppy diskettes under the brand name IMATION. Its USP was that it carried a “lifetime warranty”. It was only when someone approached 3M with a warranty claim that they learned that “lifetime” meant the lifetime of the diskette! The first time the diskette failed, its lifetime was deemed to have ended. Ergo the warranty had expired. Quite often, this happened within the first year of purchase of the diskette. Effectively, 3M’s so-called lifetime warranty covered a shorter duration than the standard one-year warranty provided by its competitors.

While sourcing the picture you see on the right, I was shocked to find out that brand new 3M floppy diskettes are still available for sale! Some things never seem to go away!! But I digress.

I’m not advocating 3M’s strategy to you but I made this short trip down memory lane just to open your eyes to the alternative ways in which your competitor might interpret your prospect’s request for “lifetime access”.

With that out of the way, let’s assume that “lifetime” means the lifetime of your prospect’s company.

The real issue for you is, what if the prospect-turned-customer lives forever and uses your software forever? You’re stuck with a finite fee for an infinite service.

While this poses a big risk, there are many other possibilities:

  1. Your prospect-turned-customer might fold up
  2. Someone may acquire your prospect-turned-customer and not wish to use your software for the merged entity
  3. Your prospect-turned-customer may junk your SAAS at the end of the current contract for extraneous reasons.

In these days of VUCA, any of these alternative scenarios is just as likely or unlikely as the “live forever use software forever” primary scenario.

If any of these alternative events occurs, your customer would stop using your software.

If you’d agreed for a onetime fee for lifetime access, you could be in the money.

On the other hand, if you’d declined, your monthly billing would stop when any one of the above three events transpires. What you bill until then might not even cover your Customer Acquisition Cost (in the worst case scenario).

Business is all about taking calculated risks.

So, you should accept your prospect’s demand for a onetime fee for lifetime access of your SAAS software.

Next, we come to the question of how much you should charge for providing that lifetime access.

The figure should be big enough for you to make money on the deal and small enough to be attractive to the prospect.

I suggest the following formula to arrive at the optimal figure:

Onetime Fee for Lifetime Access = $X + $Y + $Z, where:

  • $X = 7 years of Annual SAAS Subscription Fees
  • $Y = 1.4X, to cover 7 years’ AMC @ 20% per annum
  • $Z = Miscellaneous Fees

Most companies depreciate their investments in software fully in 5-7 years. Since the book value of your software would become nil at the end of that period, your prospect-turned-customer might buy a new software. Which means, they’d stop using your software anyway at that point. Ergo the figure of 7 years in the above formula. (Modify the number suitably to suit different depreciation policies but anything below 5 could be detrimental to your company’s financial well-being).

While working out the Annual SAAS Subscription Fees, an important parameter to be considered is the number of users. This is rarely constant over the lifetime of a software. In most cases, it begins with a conservative figure and rises progressively over the years. The actual figure at any given point in time depends upon the size of the company, nature of the software, and many other factors. As the vendor, you’ll want to set this figure at the peak number of users during the lifetime of the software. On the other hand, your customer will want to peg it at the number of users at present. Some haggling will be involved but, in most cases, you should be able to settle for the average of the two figures.

Hosting charges is one item I can think of under Miscellaneous Fees. To fulfill your commitment of lifetime access, your product’s SAAS architecture might require you to ringfence the version of your software for this prospect. In that case, we’re talking “private cloud” and you might want to add hosting charges for seven years to your upfront price.

Specific customer situations might involve complications – in fixing the user count, for example – and call for customized pricing of the lifetime access charge. Please contact us if you need any assistance.

Happy Selling!

ACHTUNG: Culture Shocks In Germany!

November 24th, 2017

As companies go global, their employees relocate to different parts of the world. Immersion in diverse cultures follows. A certain degree of culture shock is inevitable. Overcoming it is a critical success factor for globalization.

With this in mind, one of the topics I was planning to cover when I started this blog was globalization amidst cultural differences. But, amidst marketing, sales, fintech and other more frequently covered themes, culture got missed out.

I plan to make amends for that with this post, which exposes various quirks of business and social culture in Germany. It’s based entirely on the first hand experience I gained while working and living in the country in the early 2000s.

The seeds for this post were sown when I read the following question on Quora:

What are the biggest culture shocks people face when coming to Germany?

What follows is a slightly edited version of my answer.

  1. Appointments for business meetings are granted weeks or even months in advance. In other words, if you want to meet a customer, you’d better be prepared to wait for weeks or months and not days as you might be accustomed to in other parts of the world. I learned this when a prospective customer called me in August, expressing keen interest in meeting me ASAP to know more about my company’s products and services. I was ready to go down the next day. But the customer checked his calendar and gave me an appointment. It was for 27 December! (Another culture shock: Contrary to what I’d heard earlier, the European market does not shut down during the week between Christmas and New Year’s Day.)
  2. An item could have two different prices at two outlets of the same retail chain in the same city. I was planning to buy a Palm PDA. When I checked at the outlet of a leading electronics chain near my home, the model I’d zeroed down on had a price of €245. A few days later, I happened to visit another neighborhood 5 kms away from my home. I saw an outlet of the same retailer there. Out of curiosity, I stepped in. The same model of Palm PDA cost €215 here. That’s a difference of nearly 15%. Price discrimination, as this retail best practice is called, is quite common in ecommerce websites now. But it’s not very common in brick-and-mortar stores even today – at least not in the stores located in the same city.
  3. The aforementioned electronics chain accepted only cash and debit card. Then it launched a co-branded credit card. But it wouldn’t accept its credit card in its own stores! I asked the checkout attendant why they launched a co-branded credit card. He shrugged his shoulders and told me, “maybe for marketing purposes?”!
  4. It was during my time in Germany that Daimler Mercedes AG (Germany) acquired Chrysler Inc. (USA). Juergen E. Schrempp, the CEO of Daimler Mercedes was appointed the CEO of the combined company called Daimler Chrysler Inc. (DCX). His annual compensation in Daimler Mercedes was around $4M, which was a fraction of the $55M earned by the CEO of Chrysler (Robert J. Eaton). Pointing out to the huge difference, a mediaperson asked the new CEO when his salary would cross $55M. Herr Schrempp shot back, “Why should my salary increase? I’m not exactly lining up in front of a soup kitchen with a bowl in my hand.”
  5. We’re currently going through the early stages of transitioning into the newly introduced Goods & Services Tax regime in India. One of the important requirements under GST is that, invoices must mention the customer’s GST Identity Number (apart from name and address). More in my blog post entitled GST For Techies – Part 2. This measure is meant to improve traceability of goods and taxability of income through the distribution channel. This reminds me of the height of traceability and taxability in Germany: If you take your customer out for dinner, you must jot down the name of the customer on the reverse of the bill and, preferably, get him or her to sign as proof. The government’s logic was, since the customer dined with you, s/he didn’t spend money on their food; ergo, the cost of the meal should be treated as income in their hands and taxed accordingly!
  6. In stores, airports and railway stations all over the world, people generally take a luggage trolley, wheel it around here and there, and leave it wherever they’re done with it. The business needs to spend the time and money to collect abandoned trolleys and restore them back to the central trolley storage area. While that’s happening, other people are unable to find an empty trolley where it should be. This is a big problem. German railway stations solve it in an innovative way: At the storage area, each trolley – or Kofferkuli as it’s called in German – is daisy-chained to the trolley in front of it with a lock-like mechanism. The lock can be opened by popping a one Euro coin in a slot located on the side of the trolley. Passengers insert the coin at the storage area, collect a trolley and wheel it wherever they need to. When they’re done with the trolley, they can get their money back by taking their trolley to the nearest storage point – there are many of them on the platform – and daisy-chaining it to the trolley in front. The coin pops out and their trolley gets locked again. Even though the amount involved is very small, this system works very well: Most trolleys come back to storage areas without any effort on the part of the railways staff. To publicize this system, each trolley and trolley storage point has a sign that says Kofferkuli gegen Pfand, which means “Trolley against Deposit”.
  7. You don’t need to buy a ticket before boarding a Deutsche Bahn (German Railway) train. For a small additional service charge, you can buy tickets from the traveling ticket examiner inside the moving train. Even reservation of seats is not mandatory (barring a few exceptions). It’s not that trains go empty but, for some reason, reservation is not a thing in DB trains. So there’s no need to come to the station in advance to buy a ticket or check the reservation charts or stand near your assigned coach on the platform. As a result, you can literally jump into a train – stationary one, of course! This means, many passengers get into the platform seconds before a train is about to depart. When I read recent news reports about how a Japanese rail company apologized when its train left 20 seconds early, my first reaction was, “they should” – if the same thing happens in Germany, I can imagine several passengers missing their train.
  8. You have to wash your dirty linen in public. Washing machines introduce the risk of flooding, which causes the property insurance rates to shoot up by 4X. Homeowners that don’t want to cough up the exorbitant premium won’t permit washing machines to be installed inside the apartment. I found this to be true even in fairly expensive apartments located in tony neighborhoods. In those complexes, you need to go down with your dirty clothes to the basement – Keller – and use the bank of washing machines and dryers installed there. Since I was accustomed to having a washing machine inside my apartment all my life before going to Germany, I couldn’t accept this constraint and went on an elongated search for a “washing machine friendly” apartment. I found one at last but it took me a few more months and few hundreds of Euros in monthly rent to accomplish the feat.
  9. You need to take an appointment with a trash can to dispose your old bottles and jars. As you’ll soon see, this is not a joke. Trash cans inside most apartment complexes – including mine – accepted food, paper and many other types of waste but not items made of glass. There was only one glass-friendly bin in my neighborhood and it was situated one km away from my house. Now dropping glass causes noise, which annoys people living nearby. As a result, you could use the bin only on specific days and times. Ergo you needed to look up your calendar to make sure that you were visiting the bin only on the permitted date and time.
  10. Extremely expensive Rolex watches costing €€€€€ or more were shipped via ordinary post.
  11. So were stool samples! I fell sick once and had to undergo a battery of tests including a stool test. The pathology lab gave me a strip of card. They told me to smear the sample on the card and drop it in the nearest letter box! Sorry to go scatalogical but it’s only to brace you from the next culture shock.
  12. The market leader in cutlery (plates, bowls, etc.) is also the leading brand of sanitaryware (ceramic wash basins, commodes, etc.)!
  13. Public display of the German national flag is very rare (if not illegal). In my entire stay in Germany, I saw the German flag festooned on houses and cars only once: It was on the day Germany reached the finals of the World Cup in 2002. Anecdotally, the post WWII government banned the public display of the national flag in order to prevent a recurrence of what happened when Germany last exhibited a nationalistic spirit. That said, every village, town and city has its own flag, which can be displayed freely.
  14. Prostitution is legal and not met with the proverbial “wink, wink” reaction. They used to say that the best person to ask for directions to a brothel in Germany was – not a cabbie but – cop! “Wo ist der Bordello?” is the lingo, for those interested!
  15. Finally, the Mother of All Culture Shocks: Shops are closed on Sundays. I never could reconcile myself with this quirk when I lived in Germany. (I still can’t.)

Apart from being useful to people relocating to Germany from other countries, I hope this post also provides an exposure to a few practices that could be adopted anywhere in the world. Case in point: the trolley management system used in German railway stations.

That said, culture is a sensitive topic. So, I must add a few caveats before I conclude this post:

  • Some of these culture shocks are not unique to Germany. I know of condos in Los Angeles that don’t allow washing machines inside the apartment
  • Culture is subjective. What is a culture shock for me may not be a culture shock for you. I regularly come across people – Germans and non-Germans alike – who can’t understand how stores can remain open on Sundays!
  • With the passage of time, some of these culture shocks may have disappeared.

If you plan on using the guidance given in this post to sensitize yourself or your teams to Germany, by all means go ahead but please use the above disclaimer as a sort of reality check.

GST For Techies – Part 2

November 17th, 2017

Continuing from my previous post titled GST For Techies – Part 1, I’m covering some of the more complicated elements of GST in this follow on post. Part 1’s preamble applies here also but I also want to amplify my previous point about jargon.

Every specialty has its own jargon. GST is no exception. While many people rant against jargon, it’s impossible – even inadvisable – to avoid jargon while discussing any specialized topic. According to one study, a 6 page credit card agreement ran into 24 pages when shorn of jargon. So, we’ll have to live with GST jargon. That said, I’ve found a few terms used by CAs and third-party GST websites that are ambiguous or downright contradictory. Maybe accountants and compliance officers will make sense out of them but I’ve recasted those terms in a form that would make sense to a businessman (hopefully!).

With that bit of housekeeping out of the way, here goes my second installment of random rambling on GST.


Like VAT and Service Tax that came before it, GST is a value-added tax. That is, a business is only liable for the tax on the value added by it. This means that you, as a GST registered entity, can claim refund of the GST you’ve paid to your suppliers (called “tax on input” in GST lingo). This is illustrated in the following diagram.

The actual process of claiming back the GST paid out is called Input Tax Credit (ITC).

To claim ITC,

  • Your supplier must be a GST Co and issue a B2B GST invoice i.e. the invoice must mention the supplier’s name and GSTIN as well as your company’s name and GSTIN.
  • You must verify that the supplier’s GSTIN stated on the GST Invoice is valid. When in doubt, use the Search Taxpayer feature on the GST Portal.

But these are only the necessary, but not sufficient, conditions to claim ITC.

That’s because, just because you’ve paid GST to a certain supplier does not mean you can deduct it from the GST you collect from your customer (called “tax on output” in GST lingo) and remit only the net amount to the government. To that extent, the above diagram is more an illustration of the principle of ITC.

The way it works in practice, it’s the GST Portal that does the netting of input tax (or not). You can get your ITC only if your supplier has remitted the GST he has collected from you to the government.

Which brings us to the obvious question: What happens if your supplier fails to remit the GST he has collected from you to the government?

You can’t claim ITC. Period. If it sounds unfair, that’s because it is.

What recourse do you have under this situation?

It’s too early to say but, in all likelihood, very little: The government will tell you to chase your supplier to remit the GST to the government. Your supplier will tell you to mind your own business. And your CA will rule out the possibility of the whole thing happening by quoting chapter and verse of GST law, according to which the supplier will get fined if he doesn’t pay up the collected GST by so-and-so date, blah blah blah.

But, if you’ve been in business for a few years, you’d have heard about the Kingfishers of the world who deduct TDS from their employees’ salaries and fail to remit the withheld money to the government for years. So, while I hope our CAs are right and that I’m wrong, I won’t rule out some fireworks on this front going forward.

With the basics of ITC out of the way, here’s how you can benefit from it.

If you look closely at your expenses, you might find that there are many items you use for your business but pay from your own pocket. These include office supplies, snacks and beverages, mobile phone connection, travel and such relatively small-ticket items for which you get bills in your name and submit them to your company for reimbursement. If these bills continue to be made out in your personal name, you won’t be able to claim ITC of the GST you pay on them (since private individuals are not eligible to claim ITC). Therefore, you might want to get B2B GST Invoices for these items in your company’s name so that you can claim ITC.

I’ve had a mixed experience on getting B2B GST Invoices, depending upon the supplier involved. I’ve come across the following four types of GST Co suppliers in the last four months of GST regime:

  • S1: Suppliers who will gladly issue a B2B GST Invoice if you simply tell them your company name and GSTIN e.g. VistaPrint, Venus Stationers
  • S2: Suppliers who will issue a B2B GST Invoice but only after you get your account transferred from your personal to your company name e.g. Mobile Network Operators. Going by my personal experience with the MNO described in When Does Negative Copy Drive Positive Outcomes?, you might have to jump through several hoops to complete this step
  • S3: Suppliers who issue an invoice labeled “GST Invoice” but the invoice neither mentions their GSTIN nor contains any details of GST taxes levied e.g. The Paper Store. I’m not sure if these companies are to be treated as GST Co or Non-GST Co suppliers when it comes to ITC

  • S4: Suppliers who collect GST from you but refuse to issue a GST Invoice e.g. TWS SYSTEMS PVT LTD. (Tofler).

Based on my experience, I’m happy to share the following tips while dealing with each category of aforementioned suppliers:

  • #ProTip for S1: Carry a copy of your GST Registration Certification in your wallet or smartphone so that you can quote your GSTIN at checkout whenever you’re buying something for your company from these suppliers
  • #ProTip for S2: Take a call whether the ITC earned is really worth the time spent on effecting the transfer of the account from your personal to company name
  • #ProTip for S3: Avoid these suppliers as far as possible
  • #ProTip for S4: Don’t touch these suppliers with a forty feet bargepole. IMO, they’re close to daylight robbers. I’ve complained about one of them to the GST Council but I haven’t heard back from it.


VAT was applicable for export of goods. But Service Tax was not applicable for export of services. Now, GST is applicable for exports of both products and services. As stated earlier, GST registration is mandatory for anyone engaged in exports (even if they’re below the minimum turnover threshold).

One CA firm tells me that the GST rate for export of Services is 0% (as against 18% for domestic sale of Services). Whereas another CA firm maintains that the GST rate for services is the same for both domestic and export sales i.e. 18%. But both confirm that you can sidestep the incidence of GST for export of services by filing a Letter of Undertaking (if your Annual Turnover > INR 1 crore) or Bond (Annual Turnover < INR 1 crore). I’m in the midst of figuring this out and will update this post once I have it bedded down.


Reverse Charge Mechanism (RCM) is arguably the most controversial provision of GST.

Normally, if you buy anything from a GST Co supplier, he’ll add GST to his bill. You’ll pay the base price and the GST to the supplier. The supplier will retain the base price and remit the GST to the government. Now, if you buy the same stuff from a Non-GST Co, the supplier won’t add GST to his bill. You’ll pay only the base price to the supplier. The government will be short the GST tax. To make up for this loss, the government makes you, the buyer, liable for GST. In other words, according to RCM, you pay GST on behalf of your Non-GST Co supplier.

Sounds draconian, right?

On first blush, yes.

But not so much if you dig a little deeper. Because:

  • RCM is applicable only if you buy more than INR 5000 worth of goods / services from one or more Non-GST Cos in a single calendar day
  • AFAIK, there’s nothing stopping you from splitting such purchases across multiple days such that the total spend on Non-GST Cos does not exceed the daily cap of INR 5K, thereby releasing you from the RCM obligation
  • Whatever you pay as RCM can be claimed back via ITC. So, RCM is more a cashflow than a cost issue.
  • Even if you don’t have enough revenues and, accordingly, high enough output GST amount from which to net off RCM, no problem: RCM never lapses and you have until eternity to claim it back via ITC
  • Last, but not the least, you might be able to shift virtually all your purchases from Non-GST Cos to GST Cos, thereby getting out of the ambit of RCM altogether.

But the point has temporarily become moot: According to the amendments to GST announced on 6 October 2017, RCM has been put on hold until 31 March 2018.

That’s it.

Hope you found my random ramblings on GST useful in your day-to-day business.

In case you want me to amplify any of the points covered in my two posts or have any other insights on how GST works for an IT business, please share in the comments below.

Cheque – The Unsung Hero Of #CashlessIndia

November 10th, 2017

As we all know, there was a severe cash crunch in India on the back of the demonetization of high value currency notes a year ago. To ease the pain, the government of India made a big push to promote digital payments. Trending under #CashlessIndia, the drive multiplied visibility of preexisting digital payments and led to the launch of several new digital payments. Among the former category were web A2A electronic fund transfer (NEFT, IMPS, RTGS), mobile wallet (PayTM, PayZapp), credit card and debit card (Visa, MasterCard, RuPay). Among the latter category were mobile A2A electronic fund transfer (BHIM) and interoperable QR code POS payment (Bharat QR).

Still, most payments formerly made with cash went cashless due to cheques.

Household Help

Take payments to maid servants, car drivers and other household help.

Both the maid servants in my house have mobile phones, although it’s a feature phone. While some digital payments work on feature phones, their UI is in English, a language they’re not conversant with. We offered to navigate the screens of these digital payment apps but they were not comfortable taking our help. We were wondering how to pay their salaries. Then we learned that they both had bank accounts. It was easy to write a cheque in their name, fill out a pay-in slip, and deposit the cheque in their bank’s drop box. They didn’t have to make any effort to go cashless.

Service Provider

Next, take monthly payments to newspaper agents, milkmen, laundrymen and one-off but regular payments to handymen like plumbers and electricians.

As I pointed out in my blog post entitled #CashlessIndia – Why Putting Cart Before Horse Will Work, my newspaper agent was happy to accept cheques.

Ditto my milkan, laundryman and handymen.

Finextra Member Chetan Ghadge points out why cheque is popular in this category: “…it is easier for them to keep a track of who has paid and who has not. These people don’t maintain computerised records so for them reconciling digital payments is very difficult.” (Actually, reconciliation of digital payments is not a small issue even for enterprises maintaining computerized records, as I’d highlighted in Enhanced Remittance Data Could Multiply Electronic Fund Transfer Volumes).


Now, take rent payments from tenants.

Once the landlord and tenant sign a leave-and-license agreement for a typical period of 24 months, it’s customary for the landlord to take twelve PDCs (Post Dated Cheques) for a year in advance. While the agreement legally binds the tenant to paying the rent on time, PDCs provide a practical way for the landlord to enforce the tenant’s obligation without having to go to court to enforce the contract. That explains their traditional popularity for this usage scenario.

With the plethora of digital payments available post #CurrencySwitch, it should be easy to find a replacement for cheques for rent payments. Or so I thought when I had a compelling reason to explore PDC-alternatives. (This happened a few months ago when my tenant was due to handover the next batch of PDCs to me and realized that he’d forgotten his cheque book in his home town, which was 500 kms away.)

But I was mistaken.

Some of the options like credit card and debit card were ruled out straight away because I don’t have a merchant account letting me accept a card payment. Others like RTGS, IMPS and UPI were not suitable because they didn’t (still don’t) support scheduling of future-dated payments.

The digital payment that came closest to supporting this use case was NEFT. This A2A EFT method permits the payor to set up Standing Instructions for recurring future-dated payments.

But, when I dug deep, I found two shortcomings with NEFT:

  1. A tenant can set up an SI on their Internet Banking portal but, to show it to the landlord, they need to log into their online banking portal and show the SI screen to the landlord. During the process, other personal information becomes visible to the landlord. Not all tenants might be comfortable with the ensuing loss of privacy.
  2. Tenants who’re not so sensitive to privacy may go ahead but what’s the guarantee that the tenant doesn’t cancel the SIs as soon as the landlord leaves after seeing them?

In contrast, the landlord has the PDCs in their possession. While the cheques can be dishonored on the due date, cheque bouncing is a crime. The threat of fine and / or jail time is a good backstop for tenants to honor their cheques.

So, I’ve still not been able to find a digital payment equivalent of PDC. (Under the circumstances, my tenant made an IMPS payment for the following month and gave me eleven PDCs after he visited his home town and retrieved his cheque book a couple of weeks later.)

And it’s not only in India. James Furlo, Rental Property Owner/Manager in Oregon, USA, explains on Quora why he prefers cheques for rent payments despite the availability of digital payments alternatives like SQUARE, Venmo and Dwolla.


Cheques are also fairly popular in SME payments. By taking a PDC against the delivery of its goods, a supplier secures payments due in future from its customer.

There’s no denying that digital payments like BHIM have grown at a fast clip since demonetization. However, their sweet spot has been small value payments (two to three figures).

The retail and commercial payment usage scenarios covered above strongly suggest that cheque is a very compelling method of payment for large value payments (four figures and above).

On the first anniversary of #CurrencySwitch, I can’t help reaching the conclusion that cheque is the unsung hero of #CashlessIndia.