Digital payments are gaining a lot of popularity across the banking and financial sector. Transactions across the sector are undergoing a transitional change and a big boost to the this is contributed by demonetisation. Deepak Chandnani, Managing Director, Worldline South Asia and the Middle East and Managing Director, MRL Posnet shares few trends that will drive the digital payments ecosystem in 2019:
- E-commerce – When talking about the digital payments ecosystem, the e-commerce channel doesn’t receive its due. However, the reality is that e-commerce is what is going to propel digital payments. E-commerce transactions are expected to touch $120 billion in 2020 from $39 billion in 2017 growing at over 50 percent annually. India is now considered to be the fastest growing e-commerce market in the world.
- Growth in POS terminals – The reality is that most P2B transactions will still take place through a physical POS terminal. 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.
- Seamless multi-channel payment acceptance – given how the payments ecosystem is evolving, there is a going to be a demand for devices that will not only be able to securely accept credit and debit cards but also QR codes, wallets and other value-added services – all of this in a seamless manner
- Mobile – It goes without saying that mobile phones are and will play a very critical role in the digital payments space. We will continue to see increase payment as well as acceptance through mobile phones. There are a huge amount of investments being made to make this channel even larger
- Increased and sustained merchant acceptance – For digital payments to take off, this acceptance by a physical merchant is key – the number of online merchants to physical merchants is but a fraction. This will be driven by MDR cuts and government GST incentives.
- UPI 2.0 – 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, Whatsapp whose platforms are UPI-based, this growth is only going to be manifold.
- Risk management – there is going to be an increased focus on managing risk in the payments space. This managing of risk will be at both the technical level (back-end, hardware etc) as well as transactions monitoring
- Lower-cost assets – we are going to see a lot more growth through lower cost terminals as well as asset-lite modes such as QR. These modes are what are going to be key to driving the payments revolution to the tier-3 markets and below.
- NFC – There is going to be a huge movement to Near Field Communication (NFC) payments or otherwise known as contactless payments. This is also sometimes referred to as tap-and-go. This is achieved through either NFC enabled cards and/or phones. In a sign of how important this is set to come, schemes like MasterCard, NPCI and Visa have made substantial investments on this technology. In fact, NPCI will launch the qSparc card which users need only tap the terminal without having to enter a PIN for transactions below Rs. 2000. The qSparc card will also serve as the National Common Mobility Card which means it can not only be used at establishments to pay for goods and services but also as a common card on various transportation networks across the country.
Views expressed in this article are personal opinion of Deepak Chandnani, Managing Director, Worldline South Asia and the Middle East and Managing Director, MRL Posnet.