Achieving Customer Centricity with Payments Innovation
Trade has played a major role in the development of mankind. From the evolution of barter system to the invention of coins and paper money, we have come a long way. Trade has enabled vibrant competition, innovation and development of nations. Countries that are open to trade and investment are more prosperous than countries that restrict its countrymen’s’ freedom to decide how to spend and invest their money. Infact, the liberty to trade is the groundwork of modern economic system that provides unparalleled opportunities to a firm and individuals to achieve greater economic freedom and prosperity.
The way trade has progressed, so has the idea of money and the exchange mediums. The medium of exchange has evolved a lot from the time of its inception. From goods to grain, from metal coins to paper, from bank accounts to e-wallets, money has taken various shapes, sizes, and forms. Payments evolved from a barter system (exchange of goods for grains) to the token system (exchange of coins and cash on paper) to cash pooling (bank accounts and deposits) to cashless payments (credit cards, checks, e-wallets). Over the last decade or so, payment technologies have grown at an amazing pace.
Evolution of Payment Systems:
The payment channels are evolving at a rapid rate across the globe. Transaction within the country and beyond boundaries have become lot more simple with the technology advancement in the sector. The sector has witnessed new entrants in form of providers, new platforms and new payment tools being launched very frequently. The growth in usage of the digital technology/ smart cards can be witnessed in new sectors as well such as Healthcare, Public utilities & Infrastructure, Smart Cards for Government benefits, grocery stores, Food Joints, and more.
As consumer behaviour is evolving, the need for an omni commerce medium is also evolving. This characterizes the birth of a new era in payment methods which is uniform across domain whether buying in-store, online or via a mobile device. This also means need for a more adaptive, faster, simple and secure medium of payment which can be enabled through digital transformation across sectors i.e B2B, B2C, C2C, G2B & G2C. The ongoing war with alternative payment channels is intensified and is forcing the economies to take drastic measures to enable change. Some driving force behind the change are:
- Real-time payments
- Automated Telephony Systems or Interactive Voice Response (IVR)
- Blockchain and IOT
- Unified Payments Interface
Favourable regulations and polices have also the sector to gain momentum. From the development that India has witnessed in the last few years, it is evident the transformation is actively shaping up in the C2C domain and B2C, C2B AND G2C have not been left behind with technology partnerships mushrooming across banks, enterprises, and start-ups. Convenience and ease of use has enabled the growth in the sector.
The Sector at a Glance
Highlights: Digital Payments
- Total transaction value in the Digital Payments segment amounts to US$64,775m in 2019.
- Total transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 20.2% resulting in the total amount of US$135,312m by 2023.
- The market's largest segment is Digital Commerce with a total transaction value of US$58,812m in 2019.
- From a global comparison perspective it is shown that the highest cumulated transaction value is reached in China (US$1,563,675m in 2019).
Highlights: Mobile POS Payments
- Transaction value in the Mobile POS Payments segment amounts to US$5,963m in 2019.
- Transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 55.1% resulting in the total amount of US$34,539m by 2023.
- In the Mobile POS Payments segment, the number of users is expected to amount to 697.8m by 2023.
- The average transaction value per user in the Mobile POS Payments segment amounts to US$14.8 in 2019.
- From a global comparison perspective it is shown that the highest transaction value is reached in China (US$586,693m in 2019).
Highlights: Digital Commerce
- Transaction value in the Digital Commerce segment amounts to US$58,812m in 2019.
- Transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 14.4% resulting in the total amount of US$100,773m by 2023.
- In the Digital Commerce segment, the number of users is expected to amount to 657.8m by 2023.
- The average transaction value per user in the Digital Commerce segment amounts to US$114.5 in 2019.
- From a global comparison perspective it is shown that the highest transaction value is reached in China (US$976,981m in 2019).
Types of Payment:
- Making the payment
Participants in the Payment Process:
- Acquiring Bank/Merchant’s Bank
- Acquiring Processor/Service Provider
- Credit card Network/Association Member
- Issuing Bank/Credit Card Issuer
Factors supporting the Payment Process:
- Devices (Mobile/Laptops/Tablets)