All Eyes On It

Uber, Samsung. Google. Alibaba. Apple. A common thread runs across these global firms. Very shortly they will be influencing the payments ecosystem in India... and a surprising element is they are not even banks! Non-banking companies are vying for the payments piece not only globally but also in India. The landscape is changing and it is changing really fast.

It’s difficult, and at the same time, interesting to visualise all parts of the payments machine that will finally move together. On one side, we are opening payments banks to reach out to the financially underserved. On the other, a variety of apps on the mobile phone are aiming for the same set of digital savvy consumers. Companies unrelated to banking are standing shoulder-to-shoulder with banking and financial services companies to expand payment services to consumers. While not all players are directly involved with end-user payments, organisations are forming the building blocks of the environment that will shape the payments ecosystem of tomorrow. Some of the players in this game changing environment are:

Smartphone Manufacturers
Not only are smartphone manufacturers integrating hardware such as near-field communication (NFC) but developing ecosystems to enable faster payments. Apple Pay, Samsung Pay and Android Pay have recently been introduced in developed countries and will reach the Indian shores very soon.

Telecom Companies
Internet connectivity is the backbone of payments infrastructure, especially since transactions need to be authenticated in real time. As telecom companies prepare to battle it out between themselves to acquire customers, it will be a real boon for enabling payments in the country.

Technology Companies And The Startups
Tech companies are constantly inventing newer ways of payments. At FIS, we are setting up a financial inclusion lab in India to use technology for improving financial inclusion in the country. Startups are innovating payment technologies; one such startup is completely redefining how payments can happen with sound tones being exchanged. It is confident that it will work even on the busiest street with ample background noise. There are many such innovations at play — and some of these will survive being the fittest in the evolution game.

NPCI
The National Payments Corporation of India has played an excellent role as a regulator to facilitate an affordable payment mechanism. With continuous stream of payment products and interfaces, NPCI is firmly placed at the centre of the transformation. The immediate payment service (IMPS) has been extremely successful in India and shortly NPCI will introduce new projects such as unified payments interface (UPI) that will allow payments to be as easy as sending a text message. Along with UPI, NPCI is also introducing the Bharat Bill Pay system — a centralised bill payment system to pay utility bills, electronic toll collections and tap-and-go cards for mass transit systems.

Mobile Wallets
While there is an oversupply of mobile wallets today, time will decide who will survive. There is severe competition between banks, pure-play mobile wallet companies and social media apps. Indian consumers have been lapping up the wallets — largely due to convenience, promotions as well as fancy cash backs that are bundled as a package. However, in the long term, trust will be key for the wallet’s success. While we all have one (physical) wallet with us, we will have options when choosing the digital wallet for the long term.

The Payments Banks
Last but not the least, the idea behind payments banks was to make it simpler for people to make payments of all kinds, and less as a driver of savings. Their appeal could be universal — across the middle and upper classes of people at one end, where the attraction could be convenience and ease of use for frequent or routine transactions; to the low-wage earners and tiny businesses at the other end, where the driver could be less stringent and the access to essential payment services easier.

However, the payments banks will have to continuously re-evaluate and innovate in order to attract customers. They should look at holistic digitisation, rather than automating a few transactions. They will also need to re-imagine physical distribution channels to complement and leverage the digital presence. They also have opportunity to look at analytics to create novel products for end-user usage.

While the 11 payments banks may be competing for the same customer pie, there is immense scope to increase the pie — by serving the under-banked and the under-served. This can be achieved by lowering transaction costs as well as simplifying processes and technology to finally become a cashless society — across all its sections.

The author is managing director, India & South Asia, FIS

(This story was published in BW | Businessworld Issue Dated 08-02-2016)