There Is Going To Be A Focus On ‘Seamless’ Payments In The Coming Years: Deepak Chandnani
What key trends do you see taking shape in the Indian digital payments ecosystem over the next half-decade or so?
Given the pace at which the digital payments ecosystem is moving, we see several trends afoot.
The key trend we see is that of increased and sustainable merchant acceptance – this acceptance is key to digital payments growing. This will obviously be driven by MDR cuts and further government GST incentives contemplated.
POS terminals and physical cards, debit and credit, will continue to grow – the current level of POS terminals is well below its true potential. One only needs to look at mature payment ecosystems to see that this is the case. We also anticipate NFC based tap-and-go payments to pick up pace in the POS/Card ecosystem.
It goes without saying that UPI is set to boom. With the release of UPI 2.0 (P2B) as well as increased acceptance and the entrance of a number of international players such as Google and Whatsapp whose platforms are UPI-based, this growth is going to be manifold.
In terms of assets other than POS terminals, we are going to see a lot more growth through asset-light modes such as QR. Asset-light models are going to be key to driving the payments revolution to the tier-3 markets and below.
There is going to be a focus on ‘seamless’ payments in the coming years.
Tell us a bit about your experience with frauds and cybercrime within the digital payments ecosystem. What challenges exist within this space at the moment?
The fact is that the industry will always be behind the curve as far as fraudsters are concerned – this is not specific to any geography but applicable globally. That said, we at Worldline have adopted both an offensive and defensive attitude to this. On the offensive side, we have deployed sophisticated fraud detection risk engines as well as ensured that our systems adhere to the highest security standards. On the defensive side, we keep reacting continuously to previously unknown frauds.
Our experience is that there has been a continuous increase in the number of disputes that we as a merchant acquirer have received. On the POS front, we have seen an uptick in services not rendered and goods not delivered frauds – fraud has found its way into these avenues after the introduction of Chip and PIN. On the e-commerce front, the issues get a lot more complicated because of the literally limitless boundaries – there is an uptick in foreign card frauds and services related frauds.
An obvious challenge is keeping up with the fraudsters – they have all the time in the world to perpetrate a hack or device new frauds. Another challenge still is the poor awareness of consumers to protect themselves from scams such as vishing.
Worldline is a global leader in the payment services space and is present in 29 countries. We have been in the payments industry for about 40 years and came to India in 2010 through an acquisition.
In India, Worldline works with banks in all parts of the payments value chain including acquiring, issuance, terminal deployment and management, loyalty solutions and value added services like fraud and risk management. In Acquiring, we basically own or manage around one-third of the point-of-sale (POS) machines in the country. Today that includes over 1 million acquiring touchpoints consisting of POS machines and BharatQR codes. In addition, we are in the process of expanding our e-commerce solutions. We also do the entire backend work for these 2 processes including transaction processing. On the Issuance side, we work with several banks to issue credit cards and all the relevant backend work which includes printing of the card, generating PINs etc.
Worldline also has many value added services, including a fraud and risk management practice for 20+ banks, EMI solutions, dynamic currency conversion and loyalty solutions for customers like BPCL and IOCL. Our focal point is to be the leader of facilitating electronic transactions, be they payment or not. To achieve this we are continuously building strong processes and backend systems that will allow us to be relevant not just now but in the coming years.
Tell us a bit about MRL Posnet and Worldline’s decision to acquire in last year.
The payments space in India, needless to say, is changing in ways and shapes that no one could have predicted just a couple of years ago. Acquiring MRL Posnet was a no-brainer to accelerate our growth in India while consolidating our leadership position.
Headquartered in Chennai, MRL Posnet complemented our strengths by bringing to the table a product and service portfolio – strong merchant services capabilities, digital POS solutions, a device-agnostic merchant acquiring platform and risk management platforms. Their well-entrenched customer base consists of key banks and aggregators, further enhancing our market position. The combined strength of MRL Posnet and the global expertise of Worldline will help us deliver best-in-class solutions and build technological synergies that will augment our future propositions.
What’s your take on the wallets business in India? Do you think business models that have cash back offers as their main USP are sustainable in the long run?
This is a tricky question. Economics tells us that the equilibrium point is found when there are no market distortions. In the Indian wallets business, there is a market distortion of incentives across the board. Market data suggests that wallets are on the uptick despite strict KYC norms placed by the regulator. With little transparency on the minutiae of the data, one can only speculate that the transactions value could be on the back of incentives. Average ticket size is on the rise too and that is likely because of the use of wallets to book flight tickets and hotels. For example, one can see advertisements by a prominent wallet provider providing a 10% cashback for tickets booked on a prominent airline. This is just an example of what is seen pretty much across the board.
For long-term sustainability, wallet providers need to not only convince users to make transactions but also keep money in their wallets. Right now, a number of people use wallets as a pass-through using their cards or accounts in order to benefit from the incentives offered.
What’s your take on cryptocurrencies at this point in time? Large merchants such as Expedia & Microsoft are no longer accepting Bitcoin payments, Amazon has been dillydallying for long with no concrete move…. Do you see people using cryptocurrencies to actually buy things in the near future?
Cryptocurrencies are an extremely new form of currency that do not require a centralized system, hence making it difficult to regulate. However, the underlying technology, blockchain, has many more uses beyond virtual currencies. It is being used for largely B2B transfers and has hardly any P2P usage. The impact of blockchain on the industry and on P2P payments is yet to be seen.
