New Delhi: Adding another tool to push the Indian economy from cash to digital, Bombay Stock Exchange-listed banking and financial solutions company Nucleus Software Exports Ltd on Wednesday launched an offline digital cash solution technology, PaySe.

PaySe is a technology-build on the concept of crypto currency, primarily tokenization to deliver offline peer-to-peer payment solutions. The company claims it will reduce costs associated with cash by replacing physical notes with digital currency.

According to a report by the National Institute of Bank Management and Institute for business in the global context the total cost of storing, transporting and processing cash is Rs.22,000 crore annually.

The company is in talks with banks, microfinance institutions (MFIs), non-banking financial institutions (NBFCs) and the licence winners of small finance banks for integration and distribution of the devices.

The personal identification number-enabled device, called Purse, which looks like a sleek calculator of the size of a debit card, though five times thicker, has been developed by the company. The partner companies will be responsible for white labelling and distribution of the product.

The cost of consumer Purse will be Rs.1000 while that of a merchant will be Rs.2000 according to Ashutosh Pande, founder and chief innovation officer, PaySe. It will be up to the distributing companies who can subsidise to save on the cost of cash movement.

Purse will be a mobile device to carry digital money. The balance for the consumers and merchants with minimum KYC will be Rs.10,000 and maximum KYC will be Rs.1 lakh. The product will come under the pre-paid instruments guidelines of the Reserve Bank of India.

Card holders will be able to move money from connected bank accounts to the device through the online mode and then will be able to make payments offline through near-field communication technology or Bluetooth function.

“The bank account will be integrated to the device and even if someone does not have a smartphone, he can walk up to any merchant or person who has a smartphone with the Purse app and through Bluetooth function will be able to transfer money from bank account to the device and the other way around,” said Pande. This feature has been named PalmATM.

“Currently around 95% transactions in India are done through cash. They are not part of any record. There is no history for the poor who are thus not able to take loan,” said Pande, while launching the product in New Delhi. He said that the real innovation is the offline payment mechanism as even the point of sale machines carried by business correspondents in remote areas face problems due to poor connectivity. As of now, a customer will have to necessarily connect online after 20 transactions, Rs.5,000 worth of transactions or 30 days, whichever happens earlier.

Digital payments will enable analysis of transaction data which will create a credit history and will allow them to avail credit. Unlike debit or credit card transactions which attract charges such as merchant discount ratio, the company would not charge any cost for peer to peer transactions made through the digital Purse.

“We will have agreements with banks which will save of the cost of cash management for our revenue,” said Pande.