Payments in India
On 22nd November 2010, the National Payments Corporation of India (NPCI) launched the Immediate Payment Service (IMPS).
During the ceremony, Dr. Sam Pitroda - an Indian telecommunication engineer, inventor, and entrepreneur- quoted: "For any technology to be successfully adopted, it has to be simple, scalable, and secure."
In 2017, we witnessed a drastic shift of digital payments from physical cards and wallets to newer forms of payments such as Unified Payment Interface (UPI), Bharat QR, and Aadhaar Enabled Payment System. Moreover, in August 2021, Prime Minister Narendra Modi on Monday launched the digital payment solution e-RUPI, a person and purpose-specific cashless digital payment solution.
Cut to present, with 300 crore UPI transactions in July 2021, amounting to ₹6 lakh crore, the digital payment domain in India has matured to be everything that was expected out of it.
Today, the way India shop and pay has evolved beyond measure. India has indeed become a mobile-first economy when it comes to payments.
According to Vishal Anand Kanvaty, SVP – Innovation & Product, National Payments Corporation Of India (NPCI): "The payments ecosystem have leapfrogged from withdrawing cash from ATMs to using mobile-based payments thereby skipping the need of deploying POS terminals."
The payments revolution has made sure that these digital payments are adopted by the masses and are convenient.
Through collaboration, most of the payment gateways provide a holistic bouquet of financial utilities with value-added services. As a result, growth and monetization opportunities have been unlocked with featured offerings. These include loan and credit services, online shopping and e-commerce, stock trading, travel – ticket and hotel bookings, Insurance selling and premium payments, entertainment and games, movie tickets, mobile recharge and bill payments, and utility bill payments. Interestingly, for many payment gateways, it all started with e-wallet. However, not all of them were in the payments space. Here's what you need to know about dynamic QR code generation.
So, we will find examples of both forward and backward integration strategies applied for growth, which may be for survival.
Future of Payment Technologies in India
Top analysts in the payments industry are expecting a year of big changes ahead with shifts in the international landscape, the impact of new technology, and advances in rapid payment methods.
The coronavirus has been a mixed bag for the payments industry. Lower confidence and income mean fewer purchases (and payments) on the one hand, but on the other, the fear of infection is driving rapid adoption of "clean" contactless payments.
Moreover, the Covid-19 pandemic has accelerated the contactless payments trend in the past two years or so. The payment industry in India has long been a hotbed of innovation, and the lockdown has been a catalyst for change as consumer preferences shift and businesses adapt to the 'new normal.
Though concepts such as the Near-Field-Communication (NFC) have seen minimal adoption, here are a few payment innovations that have seen adoption in other geographies and could be relevant in the Indian context:
- Amazon Go
Amazon Go's "Just Walk Out Shopping" technology has taken the convenience experience of checkout-free scan-and-go services to another level, thanks to the novelty factor and the excitement for consumers experiencing some cutting-edge technologies. According to a recent survey, the cashier-less Amazon Go stores generate a high level of interest among Americans and could become a heady rival for the food retail dollar. It's just a matter of time how and when Indian markets will use this innovation.
- Disney Magic Bands
Whenever guests book a trip to Walt Disney World Resort, Disney would send them a complimentary MagicBand to use throughout their vacation if they were staying on the property.
This colorful wristband is an all-in-one device that effortlessly connects the guests to all the vacation choices they made with My Disney Experience. Disney Magic Band enables them to travel lighter throughout their vacation and use it to enter the parks, unlock your Disney Resort hotel room and buy food and merchandise. It is an exciting innovation that can be reintroduced. However, it was officially discontinued at the start of 2021.
Hopefully, India sees its first Disney World soon, and we get to use these bands for payments.
ToneTag offers solutions to its clientele to enable data communication and engagement services over sound waves. The Bengaluru-based startup, backed by Amazon, has introduced contactless digital payments through smartphones and feature phones without the Internet. The company already has reached more than 20 lakh customers globally, with partners like Yes Bank, Amazon, Mastercard, Reliance, Shopper Stop, and Airtel.
- Identity Check Mobile: Biometric payments
MasterCard launched the payment solution 'Identity Check Mobile' in 12 markets in Europe in 2016, which allows mobile payment verification using 'selfies.'
Furthermore, with the increasing adoption of Aadhaar and the launch of payment platforms such as Aadhaar Enabled Payment System (AEPS) and UPI, fingerprints have started gaining traction as a means for payment authentication.
Word of caution: Fraud prevention
As digital payments increase, so does the ocean of personal data, including personally identifiable information (PII) collected and stored. This makes payment platforms a more prominent target for fraudulent activities like phishing attacks, account takeover attempts, and ransomware.
Increasing the level of security awareness will be crucial.
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