India is going through a transformation in transitioning to digital payments. Digital payment system is multi functionality, multi device and highly convenient. Post the launch of varied options for digital payment, the future of payments in the country will show a shift beyond cards and wallets. This will have an impact on the customers and the adoption of digital payments. The payment options that are convenient and trustworthy, will gain ground going forward. In reiterating commitment to users, stabilization of options is very important. This will help increase adoption levels.
A number of options are likely to change the role of the PoS to a multi instrument PoS device, which will enable the acceptance of multiple payment options on a single device. An important factor which will bring the vision of a digitally empowered economy to fruition is extending the reach of the key initiatives to merchants. Strengthening the acceptance infrastructure by banks is crucial. Affordable options for merchants, merchant training and support, non-hardware based solutions to penetrate for financial inclusion are critical remedies. Business models for payments will have to go beyond the transaction based revenue and leverage the data to drive engagement, extend new offers and increase loyalty. An innovative business model in payments can be foreseen, which will include integrated value added offerings to drive better customer engagement.
By discouraging the cash transactions in the economy and launching a range of payment options, a long term thrust to digital payments can be provided. The Government as well as the regulator has a dual role in incentivizing digital payments to achieve scale and dis incentivizing cash. An important step taken by the Government was to form the Watal Committee under Ratan P Watal. The committee has made some recommendations which include setting up a separate payments regulator and improving the acceptance infrastructure in the country.
To achieve success in the payments business model, eco system partnerships are crucial. Due to the network benefits offered by them, their role in the economy is of significant importance. They can help improve the cross sell opportunities and leverage data by collaborating with entities in other industries like manufacturing, tourism and others. Such partnerships will help extend markets, offer new products or extend payment value chains.
The payment industry in the country is ready for disruption. With technological advances and increasing competitive pressures, there is a changing regulatory landscape which is paving the way for innovative Payment solutions being adopted in the country. An important concern to scale the technology beyond a PoC is integrating them with the bank’s current operating models, infrastructure and risk frameworks. The technologies are also currently limited across aspects like robustness, scalability and meeting the regulatory requirements.
While necessary steps are being taken, new technologies can be expected to promote digital payment transactions. The players need to look at adoption levels and commercial application of the technologies and its impact on the business model.