With 600 mn debit cards, the opportunityto shift to electronic payment is huge

T R Ramachandran, Group Country Manager, India & South Asia, Visa, in Kolkata. Photo: Ashoke Chakrabarty   | Photo Credit: Ashoke Chakrabarty

The biggest challenge in the Indian market is the consumer’s dependence on cash. Electronic payments account for 5 per cent of the Personal Consumption Expenditure (PCE), in India, so there is an opportunity to convert the remaining 95 per cent from cash to electronic modes.

T. R. Ramachandran, Group Country Manager, India & South Asia, Visa, says there is a need to work together with all industry players, regulators and the government to achieve the objective of increasing the penetration of electronic payments in the country.

How do you plan to promote electronic payments?

The Government of India and RBI’s collective resolve to move to a cashless society is very encouraging. A 2016 study conducted by Moody’s and commissioned by Visa Inc. analysed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015. Overall, the study showed that there is a direct correlation between implementation of electronic payments and sustainable growth, and this change is most prominent in emerging economies.

The study estimates that migration to electronic payments added nearly $300 billion to GDP across 70 countries and 2.6 million new jobs globally.

In India migration to electronic payments added nearly $6.08 billion to its GDP and created 1.4 million jobs. Countries like South Korea that provided tax breaks to consumers and 2 per cent reduction in VAT to merchants for card payments have benefitted from an accelerated pace of e-payments, strengthening the overall ecosystem.

The Indian government has already proposed an ambitious plan to incentivize electronic and digital payments. Once implemented, these measures would propagate tax compliance, increase Citizen-to-Government payments, reduce the cost of managing cash and encourage consumers to transact electronically. The key to achieving this vision would be efficient infrastructure and delivery mechanisms (mobile phones, small and payments banks, financial correspondents), which will help achieve the scale of acceptance of electronic payments

Can you throw some light on the latest global trends in mobile payments?

In the past decade, no technology has transformed consumer lifestyle, across the globe, more than the smartphones. Smartphones have already revolutionized messaging, photography and media, and payments are next. India is currently the second largest smartphone market in the world, with over a billion smartphones expected to be sold in the next five years. The increasing popularity and adoption of mobile devices present a huge opportunity for the growth of mobile-based digital commerce.

In line with the vision of growing the footprint of electronic payments in the country, Visa launched mVisa in India, last year. As per the data from RBI, the total transaction volume from mobile banking in India, accounted for Rs.1,035.30 billion for the year 2014-15, which clearly shows the trend of ‘payments on the move.’

Some key global trends in mobile-based payment solutions are Near Field Communications (NFC) and Host Card Emulation (HCE). These technologies have transformed the way people are paying and getting paid. We believe payments will become so invisible that people won’t need to know their account number to make a payment. Card numbers will still exist as identifiers, but they will be completely in the background. People will use a password, PIN or their thumb to authenticate payment from their mobile phone or smart device.

How is mVisa different from mobile wallets?

mVisa is a bank and card agnostic payment solution. It is an acceptance mark which indicates to consumers and merchants the standard experience of how a transaction will be performed using a mobile device. This separate acceptance mark differentiates the experience from other channel experiences available on the Visa network. Thus, mVisa is a transaction channel descriptor.

mVisa is neither a digital wallet nor a prepaid wallet. The mVisa name is not indicative of the underlying store of value (account types) involved in the transaction. The underlying account as the source of funds, which can be of any type: savings, line-of-credit, transactional, or even a card.

On the other hand, a mobile wallet requires a customer to store a value on it, to be able to transact. Through mVisa, our aim is to build an ecosystem where digital payments are seamlessly accepted and adopted. Considering that mobile phones are ubiquitous in India, this solution will help drive India’s cashless economy goal, by creating universal acceptance ecosystem for digital payments.

mVisa was introduced as a pilot in Bengaluru last year. How do you evaluate the response so far?

Since its launch, mVisa is now available through the mobile banking apps for customers of SBI, HDFC Axis Bank, Bank of Baroda and Bank of India.

In the next 4-5 months, we plan to launch mVisa with almost 7-8 more issuers there by enabling an increasing number of customers to secure, digital commerce on their mobile phones.

Visa has launched several new use cases with acceptance for F2F expanded to include large merchants like Health & Glow and Food World, and new online enablement for recurring usage categories like fast food and bill payments. The mVisa payment option is now available online on Pizza Hut, Dominos and Idea Cellular. The most recent use case added is of recharge options using mVisa for subscribers of Tata Sky.

How do you see the market growing?

The market is growing. Overall, the government’s intent to move to a less cash society is encouraging. With over 600 million debit cards in India, more and more Indians have access to digital currency. The opportunity to shift to electronic payment is huge.

There are many challenges on the road to achieving a cashless society. What are your thoughts?

The three key challenges that need to be addressed are: Creation of infrastructure – Acceptance and cost of PoS terminals; How do you make transactions easier and more convenient for consumers, without compromising security; Apprehension to use electronic modes of payment and Indians being culturally inclined to spend in cash.

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Printable version | Oct 31, 2020 1:42:56 PM |

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