India, other emerging mkts to drive payments transformation: PwC

UPIThe emerging economic power within the growing markets is set to open up opportunities for innovation and growth, causing transformation of the payments industry, a PricewaterhouseCoopers report has indicated.

Titled “Emerging Markets – Driving the Payments Transformation”, the report states, this will set the pace for markets worldwide.

The multinational accounting firm PricewaterhouseCoopers‘ report that evaluates dynamic nature of emerging markets, especially payments, which creates challenges that have never confronted the developed world but also opens up opportunities for innovation and growth, was released on Tuesday. It states the payments landscape in emerging markets, including India, is expected to transform on the backbone of accelerating growth in electronic payments.

The key factors shaping this transformation will be impact of technology, shifting customer expectations,  the rise of e-commerce, changing global demographics, and the growing regulatory supervision.

This transformation will also be characterised by convergence across markets focusing on products and solutions and by technology and business/ operating models linked to payments, which will be global in nature and reach.

According to Vivek Belgavi, FinTech Leader, PwC India, given the underlying infrastructural issues in emerging markets, “there needs to be a focus on developing the infrastructure both for issuing and acceptance of payments products and instruments”.

“Alternate payment instruments and modes like mobile wallets, virtual cards and accounts, social media and contactless payments are gaining traction for specific use cases, especially the unbanked customer base, driven by technology, customer needs and declining margin.”

In India, the new payments banks (who cannot lend but can borrow up to a limit) are expected to commence operations in 2016.

As the focus of these banks will be on transactions, they will look at offering seamless transaction options for payments such as utility bills, mobile bills, and school or college fees, either electronically or through the banking touch points created by these players.

At the core of this change will be technology, which in addition to maintaining current standards of reliability, is likely to also reduce transaction times, improve security, increase acceptance channels (especially physical), and – in the case of merchants – lower transaction costs.

Leveraging enabling infrastructure and standards such as Unified Payment Interface (UPI) and Bharat Bill Payment System (BBPS) would be critical for success.

Hugh Harley, Financial Services Leader for Emerging Markets, PwC, stated: “Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry.”

He said: “FinTech companies can work as a catalyst in the growth story, enabling these new platforms to be leveraged for the benefit of the wider populations.”

Cutting-edge technology will reshape the next-generation payment systems, with both FinTech and established players driving innovation.

The payments ecosystem will also be redefined by regulatory interventions, which are balancing the disruption of alternative payment service providers (PSPs) with the reliability of traditional players.

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