The Policy Wrap: Meesho to join ONDC, Match gets temporary relief on app payments, Digital India Startup Hub to be launched, and more
The Policy Wrap is ADIF’s weekly newsletter on all things policy in the Indus Valley Ecosystem and beyond. Share your feedback and comments with us at email@example.com.
App Store Ecosystem
Match Group and Google reach an interim compromise over app payments
The Match Group withdrew its request for a temporary restraining order against Google on May 20 – which it filed a day after suing Google over its restrictions on Android in-app payments.
Match cited a handful of “concessions” from Google in its decision to withdraw the restraining order request, including assurances that its apps would not be rejected or deleted from the Google Play Store for providing alternative payment options. The company will also place up to $40 million aside in an escrow account in lieu of paying fees to Google directly for Android app payments that happen outside of Google Play’s payment system, arguing that those fees are “illegal under federal and state law.” The escrow account will remain in place while the case awaits its day in court.
Competition and Transparency in Digital Advertising Act introduced in the United States Senate
The Competition and Transparency in Digital Advertising Act was introduced in the US Senate – wherein it would ban companies that are processing more than $20 million in digital ad transactions annually from engaging in ad sales.
If passed, the legislation would force Google to divest its digital ads business within a year. Google's revenue model is heavily dependent on advertising, as its parent company Alphabet reported $68.01 billion in revenue in Q1, $54.66 billions of which was generated by ads.
A spokesperson from Google stated that its ad tools help businesses grow and also protect customers from privacy risks or misleading ads – “breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks."
India to launch Digital India Startup Hub to connect startups with the ecosystem
The government is set to roll out a programme called the Digital India Startup Hub, which would be “a national enabler” for all startups around the country, Union Minister of State for Skill Development and Entrepreneurship Rajeev Chandrasekhar said while speaking at an event, ‘New India for Young India: Techade of Opportunities’, at the Gujarat University on May 22.
The Centre is working with state governments to launch the initiative under which there would be face-time engagements between startups and the government ecosystem on a monthly or a quarterly basis.
According to the minister, the programme would enable more student engagement in the startup ecosystem which would help them in connecting to the government’s requirements on technology by enabling more exchange of information and ideas among the big tech companies and startups in both virtual and real world.
Startups chase venture debt companies as equity route narrows
Following a sharp slowdown in funding through the equity capital route, startups across fintech, EdTech, Software-as-a-Service (SaaS) and direct-to-consumer (D2C) brands are seeking out venture debt.
The amount of debt disbursed through venture debt in India doubled in 2021 to $538 million from $271 million in 2019, according to Stride Ventures’ recent India Venture Debt Report 2022.
Last week, Silicon Valley's famed startup accelerator Y Combinator advised founders of its portfolio firms to plan for the worst and prepare for an economic downturn by cutting costs and extending their runways in the next 30 days. Y Combinator said in a note that if a company was planning to raise money in the next 6-12 months, it might be doing so at the peak of the downturn.
Ashish Sharma, managing partner of Innoven Capital, which has funded startups in their growth and late-stage including Oyo, PharmEasy, MobiKwik and Slice stated “As the equity markets turn volatile, particularly in growth and late stage, a lot of companies have turned to venture debt. Venture debt is a natural source of liquidity.”
Is India ready for tokenization this time?
The Reserve Bank of India’s deadline for the no card storage directive is June 30, 2022 – wherein starting July 1, 2022, merchants, payment aggregators, payment gateways and acquiring banks can no longer store the card details of customers. Only card-issuing banks and card networks can store the actual card data.
Earlier this month, Paytm said it had tokenized 2.8 crore cards across Visa, Mastercard and Rupay, accounting for 80% of monthly active cards on the app. Other businesses are also nudging users to tokenize their cards in order to enjoy a seamless experience from July 1.
PayU, Razorpay, PhonePe, Worldline, Pine Labs are among the companies that have come up tokenisation solutions to help businesses transition to the new framework.
In a statement to the Business Standard, Khilan Haria, VP and Head of Payments Product, Razorpay said that Visa, Mastercard, Rupay and Diners Club have gone live on its tokenisation platform with American Expresses expected to go live soon, and that Razorpay does not expect any large scale disruptions from July 1 as 100% of Razorpay merchants are live on tokenisation solution, and post tokenisation, card networks are ready to process transactions at scale.
Apple stops debit, credit card payments in India for subscriptions and app purchases
To comply with the Reserve Bank of India's guidelines on card storage and tokenisation, Apple has discontinued taking debit and credit card payments for app purchases and subscriptions using Apple ID in India.
Instead, the company stated that in-app purchases would be limited to Unified Payments Interface (UPI) and net banking transactions.
Meesho to join Open Network for Digital Commerce; plans to take on Amazon, Flipkart with branded offerings
Social commerce player Meesho is looking to join Open Network for Digital Commerce (ONDC) and has started to work on its new product called Meesho Mall.
Meesho Mall will be competing with Flipkart and Amazon directly. So far Meesho has been competing with Flipkart's social commerce app Shopsy, which was launched last year.