How much growth has mobile payment witnessed in India? What can we expect to see in 2016?
Mobile payment has witnessed exponential growth in recent times owing to increasing internet and mobile penetration and is seen today as the next layer of growth of mobile commerce in India. The digital growth coupled with Government’s initiative around Digital India and Payment Banks licenses issued by RBI are enabling the surge in the adoption of mobile payments. According to Growth Praxis, mobile enabled payments grew from USD 90 million in 2012 to its current size of USD 1.4 billion and industry projections peg it at USD 1.15 billion by the end of 2016.
Growth of mobile payments has given a birth of Mobile wallets attributed to growing purchasing power of Youth who are always looking out for a convenient, secure and hassle free transaction experience whether it’s about transferring money, bill payments, or shopping. A number of players from across industries including telcos (Idea, Airtel, Vodafone), banks (ICICI bank, SBI, Axis Bank), fintech companies (Paytm, Mobikwik) and even cab services (Ola), have introduced their wallets for an integrated and seamless purchase for the mobile first consumer segment. Further, wallets cater to both banked and unbanked consumers making it a payment instrument of choice for a much wider population.
2016 will be a watershed year for the payments industry. To get consumers to adopt mobile payments the experience needs to be better than cash – swifter and safer! It is, therefore, imperative to define robust standards of security and high quality of service. We should look at integrating technological solutions to simplify customer experiences such as using UIDAI or existing credentials for on boarding without the need of providing personal details, stand in authentication through UPI, option to move money to accounts or withdraw at an ATM and the ability to use the wallet for merchants across the board.
Wallet service providers will also need to invest in creating a larger ecosystem for their wallet to offer any tangible benefits to their consumers. Analysing target segment’s consumption behaviour to identify the key partners for digital commerce will go a long way in creating customer stickiness. By being omnipresent, brands will not only drive brand recognition resulting in a share of the wallet but will also create a case for the consumer to believe in the universal acceptance of digital wallets. Another important trend will be in-store payments. Currently, almost all wallets provide remote payments. Wallet providers will now take mobile payment revolution to brick and mortar store facilitating in-store payments at POS using mobile phones. Paytm has already taken the lead in partnering with supermarkets and petrol stations with a QR code based payment proposition.
Do you believe the financial environment in the country is becoming more conducive for the growth of digital and mobile payments?
Economies across the world have already moved closer to the digital economy with most of the transactions happening electronically, further propagating the growth of digital platforms especially mobile phones. Though India is still relying majorly on cash, there has been a huge chunk of youth (millennials) who have started to do all their financial transactions online contributing to this paperless economy. The Govt of India realizes this potential and has declared Digital India and Financial inclusion as its major imperatives to achieve the digital growth. As part of its vision, Government is not only encouraging the Digital initiatives but has also created conducive environment for growth of online and mobile banking including mobile payments in the country.
This growth of digital transformation can be attributed to the liberalization of Government policies including collaboration of multiple entities including RBI, banks, fintech companies, merchants who are leveraging on this opportunity to enable new age technologies and foster innovation. For example, contactless mobile payments at POS using NFC becoming a reality in India, due to efforts from multiple entities.
RBI has relaxed two-factor authentication for contactless payments below INR 2000 which constitutes 60% of card transactions today. This change in regulation has opened the gates for simplified one step in-store contactless mobile payments. The leading acquiring banks like ICICI, SBI and Axis Bank have taken the lead in issuing contactless cards to consumers and are aggressively deploying NFC POS in large numbers. After contactless cards, banks are planning to launch contactless mobile payments at POS. Even affordable smartphones are adopting NFC technologies to stay ahead in the competition. All such initiatives have set the stage for the growth of NFC-based mobile contactless payments in India posing a huge opportunity for technology players such as Mahindra Comviva to enable NFC-based payment system. In March 2016, ICICI became the first bank to launch HCE- based contactless mobile payments at POS driven by Mahindra Comviva’s mobiquity® Wallet.
How has the mobile finance business grown over the years? What are the key growth drivers?
With growing awareness and increasing adoption of digital payments, India is becoming very promising for mobile financial solutions. Mahindra Comviva provides the solution on both issuing and acquiring side leading to industries transformation. On the issuing side, we are working with all the top three banks of India to power their mobile wallets and contribute to the growth of mobile payments. Further, we are also powering mobile money service of one of three biggest telecom operators in India. On the acquiring side, we are working with first data offering mobile POS solution to the merchants. This enables even small and medium merchants to process card payments. What differentiates us from others, is our in-depth experience of over 120 deployments in more than 55 countries. We bring our global expertise to deployments in India to transform lives.
Can you elaborate on the contactless proximity payment service launch by ICICI bank for it ‘Pockets’ mobile wallet users?
More than 55 banks globally have introduced HCE-based payments service. HCE means host card emulation and is a form of NFC to enable contactless payments. ICICI Bank is the first entity to launch HCE payments in India with its ‘Pockets’ app in partnership with Mahindra Comviva. ”Pockets’ is one of the top 10 mobile wallet apps in India which can be downloaded by the customers of any bank and used to do shopping, pay utility bills, mobile recharge and money transfers. By adding HCE payments to ‘Pockets’ app, ICICI Bank enables 30 million consumers to make in-store purchases with a tap of their smartphones. The HCE payment for Pockets app is powered by Mahindra Comviva’s mobiquity® Wallet.
It is imperative for mobile wallet to incorporate value-added services, such as loyalty programs for example? Is the ecosystem growing?
Mobile wallets are built with the vision of replacing everything in your physical wallet right from debit cards and credit cards to metro cards to loyalty cards and even coupons, if any. Also, the most important value proposition of mobile wallets is their ability to integrate payments as well as to offer the loyalty programs to create a unified experience for consumers. Many wallets at the launch come with just the payments capability, but sooner or later most of them add the loyalty management and couponing to it.
An important thing to remember is that mobile phones leverage location and real-time notification to give you contextual promotions and instant gratification hence creating a stronger ecosystem around mobile wallets which is scalable and flexible to be designed as per their customer’s needs. Realizing this, more and more merchants are integrating with the wallet to engage with their customers in the most personalized matter, offering the next level of customer experience to its users.
The post 2016 will Mark A Watershed Year for Payments Industry appeared first on BWCIO.