Attention please PayTM! FreeCharge files patent for OTP alternative

This could be the first time that new age online companies in India realise the potential that patents carry with them.

The digital payments firm FreeCharge, which is owned by Snapdeal, has internally developed an alternative to the OTP authentication process, and has already filed for patenting the technology.

The authentication solution is called as 'On The Go Pin', and is aimed at making both online as well as offline transactions faster. This technology replaces the OTP received through text message with a pin that is within the phone and keeps changing every few seconds. From the backend, the servers of the bank and the merchants would be verifying the pin so that the transaction can be processed.

Govind Rajan, COO of FreeCharge, told ET that this technology would eliminate the wait time, caused by connectivity issues, for both the retailers as well as customers.

"This system fulfils the Reserve Bank of India's (RBI) mandate for two factor authentication and does not require even a single paisa of additional investment by retailers or customers," said Rajan, who also heads the strategy office of Snapdeal.

A deal with Shopper's Stop has already been stuck, and it would soon begin transactions using the new technology.

Filing of this patent can be the welcome sign of the modern-day Indian online industry, which has big players like Flipkart, Snapdeal and Paytm. All these companies are investing huge bucks in R&D to develop various breakthrough technologies, but this is the first time that someone has patented a technology.

Rahul Dev, patent and trademark attorney at Tech Corp Legal, told ET that this trend of patenting new technology is slowly catching up, not only to protect it against theft, but also because a patented technology, even with pending registration, becomes a highly valuable intangible asset for the company during fund raising.

It means that these patents serve as a business tool rather than a legal tool, especially for firms that are global in nature because patents command a high premium in international markets like the US and UK.

As per Sharad Sharma, former CEO of Yahoo's India R&D arm and former chairman of Nasscom's product council, 97% of patents filed in India are done by multinationals, which makes these efforts by new age companies a good sign.

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