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“This is a landmark opportunity for us. With this partnership we will be able to offer all users a seamless and ubiquitous experience across board. The corner stone of all our offerings is maximizing value and choice for customers and this is a great development” Avinash Godkhindi, MD & CEO, Zaggle was visibly excited with the partnership with YES BANK, and he did little to mask it at the interaction with YES BANK’s digital banking team. YES BANK’s digital banking head nodded in agreement, Avinash’s confidence echoed in the joint meeting.

Four months after YES BANK and Zaggle had come together for issuance of the bank’s prepaid instruments on MasterCard platform for corporate consumers; they were well on track to meet their initial targets. Both organizations had strong belief in creating a ‘cashless’ economy in India and, through this offering, aimed at reaching out to more than 1 crore customers and more than 10,000 corporate business houses targeting India’s top 10 cities.

Not ones to rest on their laurels, YES BANK and Zaggle teams had been in deep discussions at their quarterly analysis meeting at YES BANK’s head quarters. The two teams were focused on finalizing their future roadmap focusing on:

 Creation of a Zaggle YES BANK Meal Card  Creation of a New card which could address all needs of a salaried individual – to tap the corporate employee database  Creation of an innovative prepaid cards for rural customers including vernacular language integrations

I. The Need to Bolster India’s Cashless Economy: The Facts Pushing the Case

With almost 95% ‘cash’ transactions in the country, talks of an emerging ‘cashless’ economy seem premature but is imperative. Cash comes with overheads - the cost of paper money is too high and that's not even counting counterfeiting or pilferage or parallel economies - there's also insurance, and security. As per the annual report of the Reserve Bank of India (RBI) for 2013-14, the amount of currency in circulation stood at Rs.12.83 trillion with a compounded annual growth rate of 10% over the past two years. Of this, around 5% lies with banks, hence implicitly implying that almost 95% is in daily circulation. It is then of little surprise that INR 32.1 billion cost is incurred in just printing currency. To quote RBI again, it costs banks about INR 75 per transaction when a customer uses the ATM of another bank, overall the cost of running ATMs approximately places a burden of an additional INR 1520 crore on the banks. Even by liberal

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estimates, the direct cost of running a cash-based economy is close to 0.25% of India’s gross domestic product (GDP). Some feel that a reduction of 1% in cash, could spur the GDP by 4%.

Of course, these numbers seem too ‘macro’; however