Hitachi Payment Services provides cash and non-cash payment solutions and services to financial institutions, merchant aggregators and new age companies driving the digital economy. In an interview, Loney Antony, m anaging director of the company, shares his thoughts about the future of the payment industry.
Post demonetisation, what has been the increase in digital transactions that Hitachi Payment Services has seen?
Post demonetisation, we witnessed almost a 100% rise in our PoS (point of sale) transactions. This is a result of banks aggressively deploying more PoS machines. Also, customers are opting for digital payments as cash (in denominations as required) is not easily available.
How many ATMs and PoS machines has the company deployed in India?
We have cash and non-cash platforms and manage over 53,000 ATMs and over 5.75 lakh PoS and mobile PoS devices.
The deployment of PoS machines has witnessed a rise post demonetisation as there has been a tremendous increase in demand from all strata of society, including SMEs, retail stores and small shopkeepers, among others.
Will transactions lean more towards non-cash, going ahead?
At least for the foreseeable future, our view is that transactions will be a mix of cash and non-cash.
The choice should be left entirely to the customer, provided the infrastructure for both cash and non-cash is available across the country.
Will non-cash transactions accelerate the pace of financial inclusion?
The pace would be dependent on many factors, including penetration of non-cash infrastructure (currently penetration of ATMs are much higher as compared to POS), and how quickly customers adopt these new technologies. Availability of necessary infrastructure - whether for cash or non-cash transactions - will enable easy access to banking services. All these will determine how quickly we can get the un-banked population into the banking system.
What is the future of ATM machines in India?
We think that the cash recycling machines (CRMs) are the true future of ATMs in India.
The CRM has emerged as a better alternative to the traditional ATM as it can accept and validate cash as well as dispense the same cash to customers.
Is the advent of mobile transactions
transforming the payment industry?
Increasing penetration of smartphones and use of mobile Internet in the country coupled with favourable government policies have opened up many new payment options such as mobile wallets/mobile app-based payments.
These new age payment technologies provide ease of use, speed, convenience, enhanced customer experience, and are redefining the way banking is done in the country.
How can cash recycling machines become a game changer?
For financial institutions, the cost of handling cash represents a significant part of ATM operating costs. A CRM is an ATM designed to recycle deposited cash for use in subsequent withdrawal transactions. The benefit of deploying a cash recycler is enhanced efficiency — both in terms of operations as well as costs. It minimises the cash handling costs with lesser number of cash replenishments, enables 24 X 7 availability for deposits and withdrawals and better utilisation of branch teller time. Also, deployment of CRMs in areas that do not have physical bank branches will go a long way in easing transactions that would otherwise have to be conducted at the physical branches,
What is the solution for ATMs continuing to run dry in key parts of India?
Currently, close to 20 to 25% of our ATMs are running dry due to non-availability of cash.
Additionally, it seems that the cash that is going out is not coming back into the system, which is a cause of concern.
People are withdrawing more money which is evident due to increase in average withdrawal per ATM transaction. The solution would be to increase the pace of remonetisation.
What is your outlook for 2017?
While digital transactions are picking up, we feel that cash transactions will also continue to grow in the future.
This is considering that cash is still the convenient form of payment option for many low value transactions. Even in developed markets such as the U.S., which has higher penetration of digital payments, cash transactions still account for a decent chunk of the overall retail transactions.
What is your view on Unified Payment Interface (UPI)?
For Hitachi Payment Services, the growing importance of UPIwould further increase the non-cash transactions as we enable transaction processing to facilitate such payments.
