SSRG International Journal of Economics and Management Studies (SSRG-IJEMS) – Volume 6 Issue 10 – Oct 2019

Study of Existing State and Growth Prospects of Platforms in India Parul Singh#1, Kriti Thapliyal*2 #Assistant Professor, Indian Institute of Foreign Trade, IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi, Delhi 110016, India * Project Lead, New Projects, Marketing & Sales, Maruti Suzuki India Ltd 1, Nelson Mandela Road, Vasant Kunj II, Vasant Kunj, New Delhi 110070, India

Abstract cheque, credit/debit cards or (NEFT, The advent of digital revolution, huge RTGS) an individual can use a mobile to pay for a demographic dividend, penetration of smartphones wide range of products or services. Electronic and internet, entry of non-traditional players, commerce has found an obvious successor in Mobile increasing customer demands and enabling commerce which the advent of technology and value government regulations are driving the growth of proposition of enhanced utility. The capability to pay digital payments in India. The consumers today want digitally coupled with a mobile application/website is a smooth end-to-end experience and are willing to the engine behind mobile payments platforms. The break the habit of using cash for convenience and Digital Payments ecosystem includes consumer, faster check-outs. Mobile money is filling the gaps of merchant and the Payment Service Provider (PSP) delivering low-cost merchant acceptance at the last who enables the transfer of money. The capability of mile. The merchants who used cash only due to making a payment from anywhere with network proclivity towards it or high cost of card payments connectivity has become a normal phenomenon and are today adopting this change. The paper aims to does not require too much technical expertise. The cover the factors affecting the Mobile Payment future of payments processing will evolve with the Platforms industry in India. It decodes the consumer advent and mass adoption of mobile payments. Less and merchant insights and discusses the drivers and dependency on availability of physical currency and challenges to adoption of this technology. It also evolution of technologies to ease mobile payments covers a comparative analysis of the existing mobile will further impact the consumer behaviour. payments platforms. India is moving from a low The history of mobile payments dates back to 1997 volume and high transaction cost to high volume and when Coca Cola launched few vending machines low transaction cost digital economy and Mobile where the customer could make a purchase using his Payments Platform will play an important role in the . The customer had to send a SMS text future. Mobile payment platform is relatively a new to the vending machine to make a payment and the industry in India, which hasn’t been studied much. machine would then vend their product out. It Hence, an attempt is made in this paper to cover accepted text messages for making account various aspects related to Mobile Payments transactions. In late 2000s public radio programs Platforms and add to the body of knowledge. made use of USSD based mobile payment technology to collect donations from listeners. The users had to Keywords — Mobile Payment Platforms, Mobile send an SMS text with a particular code given by the Wallets, E-Wallets, Demonetization, Digital Money radio program to an assigned number, as to make a donation. This donation amount would be then added I. INTRODUCTION to the listener's phone bill. The mobile payment revolution is already here, Though the Mobile Payments Platform industry and it has started empowering the consumers. remained stagnant for a while because of lack of Convenience and the ease of making payments on the technological innovation to promote mass adoption, it go with one click has its comfort and benefits. A is undergoing a massive transformation today. mobile payment or M-payment is defined as any According to a Euromonitor article (2017) mobile monetary payment where a mobile device such as payments are expected to reach US$3 trillion by 2021. mobile, tablet, PDA is used to initiate, authorize and There is an ongoing digital revolution in India and confirm an exchange of financial value in return for the mobile payment platforms’ landscape is goods and services (Au and Kauffman, 2007). Mobile metamorphosing- i.e. it is undergoing a major Payment Platforms are those service providers which transformation and maturing. The Digital Payments, facilitate this transfer of money via a portable device especially Mobile Payments Platforms which drive operated under financial regulations of a country. this revolution promise access to formal financial Instead of paying with the traditional means like cash, services and benefits of electronic-commerce to the

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people located in the remotest parts of the country. adequate credit where needed by vulnerable groups Overall Digital Payments volume and value reached such as weaker sections and low-income groups at an 10.9 Billion and ₹2141071 Billion respectively in affordable cost” (RBI Committee and Rangarajan 2016-17, according to the Annual Digital Payment 2008). The paper Financial Inclusion: Issues and Report by Niti Aayog. This amounted to a growth Challenges (Dev, 2006) highlights the instability and rate of 55% in volume and 24% in value over 2015- high vulnerability associated with the profession of 16. The Pre-Paid Instruments (PPI) segment of farming in the country. Along with credit Digital Payments which includes mobile wallets, requirements from reliable sources, farmers need smart cards, and vouchers showed the most other financial services like insurance and savings. spectacular growth of 162.5% in this time period. The Self-help groups play an important role in The Mobile Platform Payments Service Providers increasing financial inclusion by spreading awareness (PSPs) in India consist of both bank and non-bank and promoting usage of mobile wallets. Along with players. There are 55 authorised Pre-Paid Payment the farmers, other poor sections of the society have to Instruments (PPIs), eleven authorised payments be empowered. The process of becoming a cashless , nine authorised cross-border money transfer economy will make it necessary to transform from operators and six authorised white-label Automatic bottom to the top of the administration while Teller Machines (ATM) operators according to the overcoming the roadblocks of infrastructural, Report. technological, security, regulatory and social issues. The Ministry of Finance Report on Digital The paper Acceptance of mobile money by poor Payments gives to few benefits to increase and citizens of India (Chauhan, 2015) states that M- inculcate the usage of Mobile Payments Platform. money may be the best way to achieve financial The first reason is financial inclusion. It is a inclusion. It discusses how big multinational significant challenge that India faces. Only 53% of companies rallied into the mobile payment platforms India had access to formal financial services in 2014. industry gauging its high growth potential. The paper After continuous reforms and policy introductions, associates trust with the adoption of M-money. still 19% of Indian population is unbanked or Mobile wallets may not provide all the benefits of a financially excluded. The most prominent of these bank i.e. credit, insurance or interest but it has initiatives are Pradhan Mantri Jan Dhan Yojana advantages like reduced ability to reach remote (PMJDY) and Digital India. The second reason is that locations and reduced transaction time and cost with usage of cash is expensive. Though there are higher productivity. M-Powering India: Mobile perceived benefits of using cash like instantaneous Communication for Inclusive Growth (Adler and settlement, anonymity, and security associated with Uppal, 2008) says that digitalization will increase physical value there are a lot of implicit costs democracy and transparency in the country. associated with cash. Mobile Payments digital allow Foundation of Mobile Growth in India is based on the services to be delivered at much lower costs and are development of four pillars viz. Infrastructure, highly scalable and easily accessible. As per the promoting usage of mobile-currency, increasing m- report (2016) by ‘Committee on Digital governance and encouraging regulations. Payments’ formed by Ministry of Finance, Government of India, India is a cash heavy economy, A. Drivers of Mobile Payment Platforms with around 78% of all payments happening in cash. There is a significant rise in the usage of We have a substantially high cash to GDP ratio of Mobile Payments Platforms in India and the future is 12.04% than comparable countries. According to few bright. The key drivers for this industry are: estimates, transitioning to an electronic platform for • Technology and Demographics – Digital government payments could save ₹100,000 Crores Revolution: India has a huge demographic annually, with the cost of the transition being dividend and is set to become the second estimated at INR 60,000 to INR 70,000 Crores largest user of smartphones and internet users (Committee to review the framework related to on mobile phones by 2020. India has over one Digital Payments’ report, 2016) billion mobile subscriptions. The use of The exponential growth of the sector and internet on mobile phone is increasing sharply. increasing consumer adoption to the mobile payment 2017 saw boom in Internet Penetration in India platforms makes is an important topic to be studied. with the disruption brought in by Reliance Jio The sector is being transformed and has seen and further competitive pricing by all the other remarkable progress along with regulatory support service providers. Today around 240 million over the past few years. This makes it interesting to people use smartphones and this is set become study the mobile payment platforms ecosystem in over 520 million by 2020. Given these India. smartphones devices are equipped to support all the newly developed payments technologies, II. REVIEW OF LITERATURE the growth and increased penetration of mobile Financial Inclusion is defined as “the process of and internet is enhancing the scalability of ensuring access to financial services and timely and Mobile Payments Platforms

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• Government Initiatives to make India Cashless: aware about the innovations, ready to adopt Policies and Regulations play a critical role in changes for their betterment and want their determining the nature and success of an convenience. They are willing to break the habit industry and Mobile Payments Platforms see a of using cash for savings and faster check-outs. positive support from the government. The Mobile Payments is filling the gaps of delivering government wants India to become a less cash low-cost solutions to merchants increasing the intensive and more digitally enabled society. acceptance at the last mile as compared to credit The government is continuously pushing cards. The merchants who used cash only due to initiatives to promote JAM Trinity i.e. the proclivity towards it or where not willing to PMJDY, Aadhaar Based Authentication and change due to hidden costs are becoming aware Mobile Phones. And it is further pushing the and opting for payments service providers who penetration of mobile payments by promoting are giving compelling value propositions in terms Unstructured Supplementary Service Data of low transaction costs and faster service. (USSD), Direct Carrier Billing (DCB) and Aadhaar Enabled Payment System (AEPS) to Mobile Payments Platforms have the reduce the cash usage in the economy. UPI, an capability to uniquely combine an individual’s initiative of the National Payments Corporation digital identity, digital value of money and of India has made mobile money transfer digital authentication to create low-cost access seamless and propelled large-scale adoption. to fast, secure, simple and convenient financial Using Aadhaar card for KYC in Mobile service. One-Time-Password based Payments Platforms aid this industry. Sudden authentication for Aadhaar-linked accounts and pushes from events like demonetization further biometric authentication for processing give a boost to this industry. As per the article transactions have made Mobile Payments published in Hindustan Times (2017), Paytm, Platform adoption easier. The flexibility and one of the popular mobile wallets in India option to choose from a varied set of reported a 435% increase in traffic, 200% technologies as varied as USSD to Audio QR growth in app downloads and 250% rise in in based Mobile Payments Platforms, has made it overall transactions and transaction value possible to meet the needs of the diverse set of during demonetization. The BharatNet Phase 2 consumers that India has. Point-of-Sale initiative under Digital India launched by the terminals had always had a low penetration in government aims to provide broadband India with respect to comparable economies. connectivity to cover 250,000 Gram This was mainly because banks have built Panchayats making it possible for 100% of all merchant acquiring in India on the four- party devices to be internet enabled by 2020. model, which results in making it economically • Entry of Diverse Players: The activity in unviable for small businesses to have a POS. Digital Payments industry is at its peak and That is why even after exiting for over two multiple players across categories are entering decades card payments still see low penetration into this industry given its high potential in India. Mobile Payments Platforms have growth. With the increased number of serve potentially lowered the acceptance costs for the providers and internal competition within them, merchants. Aadhaar has helped process of the consumers and merchants are getting merchant authentication and documentation attracted to the varied offerings availing the and usage is as simple as downloading the additional benefits. Few of the categories of application on the mobile phone and large players are manufacturers (Apple, registering on it. This entire ecosystem has Samsung), tech firms (Google, eBay, Alibaba), evolved the traditional on-boarding process, retailers (Starbucks, Walmart), telecom hardware requirements, paper based companies (Vodafone, Airtel, Jio) and Start- authentication and connectivity. ups (Paytm, Freecharge, MobiKwik). According to the PWC – Redrawing the Lines - Moreover, mobile phones are highly secure and 2017 report, India offers the highest expected enable data collection besides payment return on investment on FinTech projects , transactions. Data is the oil of 21st century. which is 29% compared to the global average Companies today offer their customers of 20%. personalised marketing and experiences. Thus, • Evolving Consumer – More Aware and this data can be used to analyse the merchants Demanding: Indian consumers are showing great and consumer preferences. These are all in all affinity to digital technologies, with growth rates the trends which are pushing the rise of Mobile for mobile phones and e-commerce adoption far Payments Platforms in India. over taking the rates in developed economies. Today, the consumers want a smoother end-to-end experience during any transaction. They are more

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B. Challenges hindering the growth of Mobile most mobile payments platforms require Payment Platforms customers to have a pre-existing bank account Though Mobile Payment Platforms are this poses as a challenge into further rising in India, there are few challenges which may penetrating these platforms. undermine their growth. Rural India has remained excluded from formal • Interoperability stagnating Scalability: services for a long time so much so that they Payment Platforms are driven by individual now feel that banking is not for them. With this mind service providers that create individual closed set they have become accustomed hoarding cash or loop payment systems. For example, a digital resorting to informal creditors like money lenders. wallet company in India acquires a large For them having the comfort of being able to convert customer base and is trying to further build the stored value of Mobile Money to Cash is very acceptance amongst consumers and merchants, critical for widespread adoption. In the future, we can however this is stagnated by the principle of expect UPI and service providers to simplify this interoperability. Individual closed loop problem. Security and trust in Non- Banking payments systems will work well for small Platforms remains an issue which needs to be solved countries with a handful of main players. But for the success of Mobile Payments Platforms. Thus, for a large and diverse country like India, it is building a robust infrastructure to support of utmost importance to have standards and connectivity in all the parts of the country; educating interoperability among various mobile payment people and making them aware to financial and systems. This innovation and regulatory digital services; innovating and evolving while change must be expected in the future to building trust in time will lead to growth of Mobile further propel the growth of Mobile Payments. Payments in India. • Network Connectivity and Speed: If the speed III. OBJECTIVES AND RESEARCH of mobile payment transaction is slow METHODOLOGY especially at the POS, we cannot expect mobile payments to replace cash. Both the consumers The aim of the study is to analyse the factors and merchants want a quick turnaround time. affecting the Mobile Payment Platforms industry in But the network infrastructural facilities in India. It also assess the consumer and merchant India are still in poor in most of the areas. Poor behaviour linked to Mobile Payments while also connectivity and slow internet speed lead to looking at the drivers and challenges to the adoption transaction fail or time out often resulting in of this technology. The research methodology used is consumers and merchants going back to using a quantitative primary research. A questionnaire was cash. A bad consumer/merchant experience designed for the research with the purpose to discourages them to use a mobile payment understand the Consumer and Merchant perspective platform in the future as well. Marginal towards Mobile Payments Platforms. Accordingly, a connectivity in remote parts of India further primary research to understand the Consumer and discourages the penetration of Mobile Merchant perspective towards Mobile Payments Payments Platforms. Platforms was conducted. The main objective of the • Digital Literacy: A large chunk of the Indian survey was to gauge the penetration of Mobile population who does the high value Payment Platform in Metro cities, understand the transactions is not tech savvy. Also, the drivers and barriers in the adoption of mobile consumers/merchants in rural India lack basic payments platforms and understand consumer and digital literacy. Both these segments are the merchant sentiments attached with it. In total 164 target of Mobile Payment Platforms to increase Consumers and 73 Merchants participated in this Value and Volume of transactions of and survey. increase scale of Mobile Payments. This IV. COMPARISON OF MOBILE PAYMENT challenge is supplemented with the consumers’ PLATFORMS inherent habit of using cash. Thus, there is a need for public and private institutions to work The Indian e-wallet industry is over ten towards educating the population and making years old with the first such mobile payment platform them comfortable with technology and helping being Wallet365.com. It was a service platform rolled build trust in the system. out in 2006 by the Times Group in association with • Financial Inclusion: Financial inclusion means YES Bank. By 2017, there are around 80-90 players delivering banking services at affordable costs in this industry with 55 authorised non-banking to the disadvantaged and poor sections of the players like Paytm, Mobikwik, Freecharge, Oxigen society. It is vital for improving the lifestyle of Wallet etc. The mobile wallet industry in India is the residents of rural India who specially likely grow to $4.4 billion by 2022 according to a farmers who are highly vulnerable. This still Capgemini’s World Payment Report of 2017.The remains a challenge in India as 19% is still report projects the compounded growth to be of unbanked (ASSOCHAM-EY, 2017). And as 148% (CAGR) in the next five years. This section of

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the paper conducts a comparative analysis of various are charges on usage of Debit Cards. Some fees mobile payment platforms on the following key have to be paid to transfer money from E performance indicators: wallet to bank account depending on the type • Transaction Limit: Government has limited the of wallet. For transaction of money up to one maximum monthly transaction on mobile Lakh UPI and wallets are good option and wallets to INR 20,000 without a KYC. This NEFT above one lakh but the time ta ken for decreases the day to day usage and utility of NEFT increase as compared to Wallets. the Mobile Payment Platform considerably. • Financial Information Required: This factor Value of transaction limit plays a very directly affects the speed and complexity of the important role in selecting the mode of transaction. Larger the set of information payment. Opening a bank account is a very required, lesser is the speed of transaction and cumbersome process involving various the convenience. However, at the same time, documents and signatures. Also using banking safety of the transaction is equally important. modes such as RTGS or NEFT requires Sharing of bank details on an online cyber registration of beneficiary along with his platform is always dangerous and may lead to details which makes the process a complex one. fraud or tempering with the account. With On the other hand, transferring money through cyber-crime growing at a rate of 350% year on wallets or UPI doesn’t require any such thing year, safety of the transaction is utmost and can be done in mini seconds. But there is a importance. In all of the above payment modes, transaction cap on these transactions. Hence UPI uses virtual address while all other mode the transactions can be identified as high value uses real account information in one or the transactions and low value transaction and the other way making UPI the safest among all the mode of payment should be chosen based on payment modes: Account Number, Bank Pin the value of transaction. If the transaction is Code, And IFSC code is required for RTGS above INR 20,000 RTGS or NEFT should be and NEFT transactions; MPIN, Aadhaar, IFSC used while for lower ticket transaction wallets Code, or Account Number is required for or UPI can be used. USSD transaction; For transaction using cards, • Transaction Time: One of the most important POS transaction required PIN and Online Key Performance Indicator to gauge the transaction required CVV number and other performance and convenience of a Payment card details; UPI requires Virtual Address and Platform is the Time of Transaction. Physical to transact through Wallets one needs to login Money and Card transactions at POS are information of wallets almost instantaneous. Thus, if a Mobile • Authentication and Network Safety Payment Platform has to compete with them it Comparison: has to perform in this KPI which varies from A Two Factor Authentication is provided by one second to one day. This is one of the key the all the mobile payment modes discussed. performance indicators to gauge the efficiency Which means a login and Password followed of a payment mode. RTGS/NEFT requires by an OTP is used to perform a transaction. registration of beneficiary before any • Technical Infrastructure requirement: In a transaction which may take up to 24 Hours diverse nation like India, whether the Mobile depending upon the bank. There is no real-time Payment Platform requires a Feature Phone or update regarding payment or transaction while Smart Phone or High-Speed Internet UPI and mobile wallet transact directly in Connection or POS Terminal Device etc. seconds making the entire process a highly decides the scalability of the platform. In terms efficient one. of Technical Requirement also, RTGS/NEFT • Availability of Transaction: Some of the required a stable internet connection while the transaction modes are available 24*7 while other modes require a smartphone. Table 1 and some are available during bank timings only Table 2 below encapsulate this comparison. which hampers the platforms utility. RTGS is available between 8:00 Am to 4:30 PM, while NEFT is available between 8:00 AM to 6:30

PM. Other modes such as IMPS, USSD, Debit Cards, and Wallets are available 24*7. • Cost of Transaction: It is one of the most important factors to adopt any mode of payment. Given the demonetisation move, government recently slashed charges on all of the payment modes and we saw a bulk marketing activities by various e-wallets promoting null transaction charges. Also, there

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TABLE I: Comparison of Mobile Payment Platforms

KPI Real Time National Immediate Unified Unstructured Credit/ Debit E - Gross Electronic Payment Payment Supplementary Cards Wallets Settlement Fund Service Interface (UPI) Service Data(USSD) (RTGS) Transfer (IMPS) (NEFT) Transaction Time Real Time Same Day Instant Instant Instant Instant Instant Transaction Limit INR 2-10 Lacs INR 10 Lacs INR 2 Lacs per INR 1 Lac per INR 5000 per Card INR day transaction transaction Dependent 20,000 per Month Transaction 8:00am- 8:00am- 24*7 24*7 24*7 24*7 24*7 Availability 4:30pm 6:30pm Information Required Bank Acc. & Bank Acc. & Bank Acc. & VPA of Bank Acc. & M-PIN PIN for POS & Login IFSC IFSC IFSC Recipient CVV for Online Details Authentication 2 Layer 2 Layer 2 Layer 2 Layer 2 Layer 2 Layer 2 Layer Interest Yes Yes Yes Yes Yes Yes No Technical Internet Internet Smart Phone & Smart Phone & Any Mobile Phone Smart Phone & Smart Requirement Internet Internet Internet Phone & Internet

TABLE III: Comparison of Mobile Payment Platforms based on Transaction Cost

Transaction Real Time National Immediate Unified Unstructured Credit/ Debit E - Wallets Cost based on Gross Electronic Payment Payment Supplementary Cards following Settlement Fund Service Interface Service amount (RTGS) Transfer (IMPS) (UPI) Data(USSD) (NEFT) Up to INR INR 2.5 NA INR 5.0 INR 0.5 INR 0.5 Annual No Transaction 5000 Renewal Fee, Charges from INR 5000 - INR 2.5 NA INR 5.0 INR 0.5 NA Nil Charges at Peer to Peer 10000 POS, Online INR 10000 – 1 INR 5.0 NA INR 5.0 INR 0.5 NA Transaction Lac Charges Levied INR 1 Lac – 2 INR 15.0 NA INR 15.0 NA NA Lac INR 2 Lac – 5 INR 25.0 INR 25.0 NA NA NA Lac INR 5 Lac – 10 INR 25.0 INR 50.0 NA NA NA Lac

and speaker setup. Thus, using ultrasonic audio to V. RECENT DISRUPTIONS IN THE MOBILE replace NFC will make direct wallet-based cashless WALLET INDUSTRY transactions easier. Unlike other mobile wallets, it In September 2017, the tech giant – Google doesn’t require its users to store money in the app but entered the Mobile payments platform in Asia with just serves as a secure digital exchange platform. the launch of Tez. The platform is based on the Google has partnered with four banks — Axis Bank, government backed UPI (Unified Payments Interface) HDFC Bank, ICICI Bank and State Bank of India built by NPCI. This mobile application has been (SBI) — for supporting this solution. specially designed for the Indian consumer and is Moreover, it will work with all the 55 banks who available in eight languages – English, Hindi, Bengali, are on the UPI platform. “Tez for Business” is a Gujarati, Kannada, Marathi, Tamil and Telugu. solution where merchants get their own business Moreover, it uses Audio QR, a Google’s proprietary channel on the app where they can engage directly technology which supersedes the security of until with their customers to share offers, send payment now profoundly used Near Field Communications reminders, link to their mobile website or customer (NFC) sensors to make payments to other device or support, and more. The biggest incentive is minimal Point-of-Sale (PoS) machines. The application is latency and no transaction fees. With Google’s high designed to work on every smartphone, whether penetration and experience in the tech domain, this expensive or entry-level. Every smartphone can disruption is giving the other platforms a run for their generate and capture audio through its microphone money.

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Another disruption soon to arrive the Indian 46% of all the survey respondents has the positive Mobile Payments Platform Industry is the WhatsApp sentiment of Convenience associated with mobile payment service. This is the first time the Instant payment platforms followed by the sentiments Easy messenger - WhatsApp shall be launching a and Fast at 37% and 32% respectively (Fig.3). Only payments service around the world. The tech giant is 12% of all the survey respondents had the negative busy finishing its intuitive in-chat payments feature, sentiment of Complicated associated to these which could turn out to be the next big threat to all platforms followed by 6% considering it Confusing players in the digital payments industry. The (Fig.4). messenger already has a huge user base; thus, The survey reinstated the fact that Convenience customer acquisition shall not be an issue for it along with the Marketing Push and Pull of Service making it even more difficult for the competitors to Providers in driving this industry. It also highlighted fight. The instant messenger is a Facebook owned the wrong perception amongst the merchants related company which got approval by the government to to transaction charges and the need for spreading integrate the UPI with the messenger in July 2017. awareness at the ground level. WhatsApp is now ready to jump in this industry and compete head on with other tech giants like Google. With unconventional players entering the industry with unique solutions, the ultimate beneficiaries are the consumers and merchants. With the players fighting for a larger chunk of the pie, the users are getting incentivized. This entire process is further increasing the penetration of Mobile Payments Platforms in India.

VI. UNDERSTANDING THE CONSUMER AND MERCHANTS PERSPECTIVE ASSOCIATED WITH MOBILE PAYMENT PLATFORMS

A primary research to understand the Consumer and Merchant perspective towards Mobile Payments Platforms was conducted. The main objective of the survey was to gauge the penetration of Mobile Payment Platform in Metro cities, understand the drivers and barriers in the adoption of mobile payments platforms and understand consumer and merchant sentiments attached with it. In total 164 Consumers and 73 Merchants participated in this survey.

Convenience was the biggest driver for adoption for Consumers while the Business Development Team acquisition followed by Customer Demand were biggest drivers for adoption for Merchants. Proclivity to cash was the biggest barrier in adoption for Consumers while Additional Transaction Costs involved was for Merchants. The three most important features of a Mobile Payment Platform that influenced the consumers on these platforms were Deals Offered, Acceptance at Offline/Online stores and Usage Experience with 54%, 49%, 40% percentages respectively (Fig.1). The most important features of a Mobile Payment Platform that influenced the merchants on these platforms were Transaction Charges, Customer Demand, Customer Support and User Interface with 47%, 34%, 28%, 28% percentages respectively (Fig.2).

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Transaction Charges 10.2 Customer Care Support 18.6 User Interface 22 Back-end Functioning (Bank Linkage, Process Involved) 23.7 Usage Experience 40.7 Acceptance at Offline/Online Stores 49.2 Deals Offered 54.2 Percentage Consumers

Fig.1 Top 3 Deciding Features of a Mobile Payment Platform Selection for a Consumer

Deals Offered 2.6 Back-end Functioning (Bank Linkage, Process Involved) 13.2 Usage Experience 18.4 User Interface 28.9 Customer Care Support 28.9 Customer Demand 34.2 Transaction Charges 47.4 Percentage Consumers Fig.2 Top 3 Deciding Features of a Mobile Payment Platform Selection for a Merchant

Priceless 3.00 Irreplacable 7.00 Empowering 13.00 Awesome 16.00 Simple 29.00 Fast 32.00 Easy 37.00 Convinient 46.00 Percentage Respondents

Fig.3 Positive Word Descriptors for Mobile Payments Platforms

Disappointing 3.00

Difficult 4.00

Risky 4.00

Annoying 4.00

Confusing 6.00

Complicated 12.00 Percentage Respondents

Fig.4 Negative Word Descriptors for Mobile Payments Platforms

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The main objective is to develop a service VII. LADDER TO GROWTH: MOBILE which is universally acceptable and usable as PAYMENT PLATFORMS Cash. Around 68% of transactions in India take place in • Lowering costs with strategic partnerships: The the forms of cash (CLSA, Business Standard, 2016). higher the costs of acquisitions and operations is We are gradually moving on the digital path. Virtual for the service providers, the higher will be the Money technologies like mobile payments platforms, cost of transaction transferred to the customers. cryptocurrencies, mobile peer-to-peer payments etc. Thus, with strategic partnerships like with an e- are well acknowledged in the country. But in reality, commerce company the service provider can we continue to live physical-cash intensive country again deep reach into the geography and which has diverse demography and needs. The Indian customers. Being one spot solution for all Government has been paying great emphasis on financial needs of the customers the service financial inclusion and making financial services provider will require bank, insurance, retailers available to the remotest corners of the country. The etc. as partners. Providing VAS and a huge customers are evolving. Their aspirations are changing. network of presence can all be developed with They have more disposable income and the increased partnerships and tie-ups. consumption expenditure is growing. Urbanization • Using Customer Data to develop new revenue and digitization have changed the lives of many. Rise streams: Data is the oil of this century. With of smartphones, penetration of internet in the country, concepts like Big Data and Internet of Things boom of e-commerce, increased awareness and coming up, customer data becomes of utmost literacy and supportive regulations all create a bright importance. While maintaining the privacy of future for the Mobile Payments Platforms in India. the customers, using the transaction data to India’s huge demographic dividend is itself a boon create spend patterns with historical data and a bane. Innovations and scalability are enhanced analysis can help the companies come up with by this size. But at the same time reaching out to such personalized solutions, push services, increased a huge number and meeting their diverse needs is a revenue. It can also help the service providers challenge. The key to the future of mobile payments if better their service and fulfil customer how can it really replace cash. That will only happen requirements. when it imitates its qualities in all respects. Simple, • Enhance value proposition beyond simple quick, easy to use, universal acceptance, less risks are transaction to other financial services: With the the qualities a customer looks for. It should be fast, boom of e-commerce there is an array of VAS save time, have low adoption cost, open new revenue that the mobile payments platforms can enter streams for the merchant and customer centric. and enhance their revenue streams. Inclusion of services like public transport, healthcare, A. Role of Services Providers education which are indispensable are few of The service providers must gear up to address the them. Getting into financial services like short future changes and below are a few pointers: term credit, insurance investments, banking • Understand customers and fulfil their needs: services are others. Elaborating the e-commerce The customers are evolving and so are their business on the platform can further enhance the needs. The customer has higher disposable revenue streams for the service providers. income and spends more. The customer seeks • Innovate and use technology to evolve: NFC simplicity and convenience. Developing a was being used as the basic technology in many mobile payments platform which provides an mobile payment platforms for a while now and array of value added services and fulfils the then Google disrupted with the Audio-QR complete list of end to end financial technology in its platform Tez – which was requirements of the customers is needed in the more secure. Technological innovations are future. The main objective is to build an continuously taking place. To invest in R&D omnipresent ecosystem with cash in/out outlets continuously improve the product is the main spread across cities and multiple usage of the objective. To evolve and become suitable to the platform. evolving customer and merchant needs, • Develop a product to suit the public at large: disruptive thinking powered with technology is India is large country with huge demographic needed. dividend. There a huge potential to scale any • Increased Scalability and expansion: To deliver service, there is also a barrier of meeting such technology advanced products requires a the needs of a diversity. Simple, intuitive, lot of infrastructure which requires a lot of multilingual, easy to use interface service is investment. Economic viability of such a required. Studies show that services which are business where per user margins are very low push in nature i.e. they require the customer to can be ensured only by achieving scale. Thus, a enter a lot of data before a transaction are less combination of all the above pointers along with successful than those which are pull in nature. cross-selling other products, low cost of service

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and gaining new customers will help the mobile change. The regulatory bodies can design payment platforms to thrive in the future. frameworks and regulations compulsory for all service providers to follow to enhance peoples’ trust in this ecosystem. B. Role of the Government • Making Digital Payments Easier: Cash India has huge potential to grow its Mobile transaction has the quality of being Payments Industry. But for any industry to thrive, it is instantaneous and simple. Every mobile pre-requisite for government support to exist. The payment platform has speed and complexity current Indian government wants to move India associated with a transaction. For example, 2- towards a Cashless and digital economy. When factor authentication takes place on majority of compared to other comparable developing nations, platforms. If this process is removed for micro India still has potential to grow the share of digital transaction, say which are below INR 250, the transactions happening every day. Thus, here are a process would become faster, less complex, and few pointers that the government and RBI should put save costs. in place to give this industry and its consumers the • Building Infrastructure: Penetration of internet, necessary boost: smartphones, and digital literacy are basic • Spreading awareness: The Indian government is requirements for the growth of mobile payment already laying a lot of emphasis on the cost platforms across the country. Investments in the associated with cash transaction. It also wants sectors will be required to receive the basic India to move towards Digital Payments. network capacity and speed in the remotest According to few estimates, transitioning to an parts of the country. Along with that the electronic platform for government payments enhancement of payment ecosystem could save ₹100,000 Crores annually. The infrastructure like the development of IMPS, government believes in taking bold moves like UPI, BHIM, BBPS must be further encouraged demonetization to make radical changes. It can in the future. further continue its legacy by incentivizing digital payments or using the negative In a nutshell, for the successful development of reinforcement by associating a cost with cash mobile payments platforms we require enabling the government can further propel this change. regulations, robust infrastructure, diligent • Incentivizing the usage of Digital and Non- service providers continuously innovating to Cash Methods: Merchant Discount Rate is the improve and a user base inquisitive to adopt fees charged for Digital Transactions. The RBI technological changes for the betterment of the that MDR incentives are announced and society and lifestyle. communicated to all the users. Awareness and correct information can help accelerate the digital payments adoption process. Further VIII. CONCLUSION mobile payment options with government As the Mobile Payments Platforms grow with time agencies, tax relaxations, removal of there are challenges it will have to face because of the convenience fees etc. are other possible developing nature of India’s economy, infrastructure incentives for usage of non-cash methods which and society. With India being a cash heavy economy the government can offer in the future. with high proclivity to usage of physical money, the • Reducing the Red Tape: New customers inertia attached with adoption needs to be superseded. signing-up sometimes act as a barrier in Significant investments on industry players’ and adoption of mobile payment platform when too government’s part in spreading awareness and pushing many details are required for the process. adoption through marketing initiatives has to be seen Moreover, a cumbersome KYC process used to in the road ahead. Along with this, continuous product be required to extend limit on transactions and improvement, increased security, inter-compatibility accessing other benefits on these platforms. comparable to cash are also key factors which the With Aadhaar card, the KYC process of the Mobile Payments ecosystem has to develop. As the previously existing users could be fast tracked. industry matures, its consolidation is a natural instinct. Similar regulations and frameworks are required We have already seen acquisitions like Flipkart taking to ease the process of adopting this mode of over PhonePe, PayU acquiring Citrus etc. This will payment. enhance the usage of funds and know-how. Investors, • Policies and Support System to address want to minimize costs and change the business model. consumer grievances: In the BCG Survey a Consolidation will help in improved products and significant barrier for adoption for mobile better customer service. Government powered UPI payments platforms was the lack of customer developed by NPCI has disrupted the Mobile Payment support and physical touch points for grievances Ecosystem. Such initiatives on the government’s part redressal. Many users fear loss of money on along with policy reforms to support the industry these portals and hence are not adopting this players and ease customer usage will further grow this

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industry in the future. The consumers and merchants September, 2019 from needs and pain points are evolving with time. There http://www.assocham.org/newsdetail.php?id=6397 [2] Lyida Gordon & Michelle Evans (2017, January). [5 Key are many players in this industry and most of them Trends That Most Shaped Mobile Payments in 2016] have begun expanding beyond their core service of Retrieved on 30 September, 2019 from Money Transfer. This diversification includes e- https://blog.euromonitor.com/2017/01/5-key-trends-shaped- commerce, hyper-local transactions, micro-credit mobile-payments-2016.html [3] Adler, R., & Uppal, M. (2008). M-powering India: Mobile facilities etc. In this competitive industry, the players communications for inclusive growth. Aspen Institute India, it is a must to differentiate from others, and thus all in partnership with Aspen Institute, Communications and the players keep on innovating and enhancing their Society Program. value proposition to attract new users and retain the [4] Au, Y. A., & Kauffman, R. J. (2008). The economics of mobile payments: Understanding stakeholder issues for an old ones. A close observation of their pointed out that emerging financial technology application. Electronic convenience and ease of usage is what drives adoption Commerce Research and Applications, 7(2), 141-164. but at the same time proclivity to cash and complexity [5] Bhatnagar, H. (2017). Demonetization to digitalization: a in understanding these portals act as barriers for others. step toward progress. Management and Economics Research Journal, 3(2017). Mobile Payment Platforms Model is the cost effective [6] Chauhan, S. (2015). Acceptance of mobile money by poor and highly scalable when compared to the credit/debit citizens of India: Integrating trust into the technology card four-party model. This model is not cost effective acceptance model. info, 17(3), 58-68. in transaction cost, associated hardware cost and [7] Rajat Wahi (2017). [ Deloitte, Leading the cashless charge – Evolution of the digital wallet industry in India] Retrieved on transaction service cost. Today with so many players, 30 September, 2019 from there are closed user groups formed with no https://www2.deloitte.com/content/dam/Deloitte/in/Documen universally acceptable platform (like cash). Thus, with ts/strategy/in-strategy-leading-the-cashless-charge-noexp.pdf joint policy development and go-to-market strategy [8] Dev, S. M. (2006). Financial inclusion: Issues and challenges. Economic and political weekly, 4310-4313. the government, regulators, and industry players must [9] Fali Hodiwalla (2016) Ernst & Young LLP , The Case For develop a universal mobile payments infrastructure. Mobile Payments In India, Retrieved on 30 September, 2019 Mobile Payments’ incessant success depends on from http://www.ey.com/Publication/vwLUAssets/EY-the- product and process improvement from the players, a case-for-mobile-payments-in-india/%24FILE/EY-the-case- for-mobile-payments-in-india.PDF, supportive regulatory environment and focussed [10] P. Vijaya Bhaskar (2013, January) [Financial Inclusion in efforts of the players and the government towards the India – An Assessment] Speech delivered by Shri P. Vijaya main objective of increased adoption Bhaskar, Executive Director, Reserve Bank of India at the MFIN and Access-Assist Summit organised in New Delhi on December 10, 2013, Retrieved on 30 September, 2019 from https://www.bis.org/review/r131211h.pdf IX. LIMITATION AND FUTURE RESEARCH [11] The Economic Time ( 2017 ,November) [Government rolls SCOPE out BharatNet Phase 2, aims 100% connectivity by 2020] Retrieved on 30 September, 2019 from https://economictimes.indiatimes.com/tech/internet/governm The study has some of the limitations and also ent-rolls-out-bharatnet-phase-2-aims-100-connectivity-by- offers scope for future research. The study conducted 2020/articleshow/61632756.cms has limited audience for primary research and the data [12] GSM Association (2017) [The Mobile Economy 2017] collected for the study is limited to the viewpoints of Retrieved on 30 September, 2019 from https://www.gsmaintelligence.com/research/?file=9e927fd68 the respondents. The results may show variation if 96724e7b26f33f61db5b9d5& download conducted in different environment or country. Also, [13] Iyer, S., (2017, June) [Want to reduce cash from 12% to 5% the market and industry is dynamic and the technology of GDP’, The Times of India] Retrieved on 30 September, is continuously evolving the findings may show 2019 from https://timesofindia.indiatimes.com/business/india- variation is conducted in a longitudinal research. The business/want-to-reduce-cash-from-12-to-5-of- inputs from industry players can also be collected to gdp/articleshow/59242788.cms? understand their perspective. This will also throwing [14] Jenkins, B. (2008). Developing mobile money light on what they ponder of future industry ecosystems. Washington, DC: International Finance Corporation and Harvard Kennedy School. movements. Another important role is played by the [15] Mritunjay Kapur (2017, April) [KPMG, Digital Payments- government. There is also scope to study that how Analysing the Cyber Landscape] Retrieved on 30 September, investments made by the government can impact the 2019 from mobile sector industry in India. At the same time, https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/04/D igital_payments_Analysing_the_cyber_landscape.pdf future investments plan by private sector also needs [16] Thad Peterson & Ron van Wezel (2016 , August) [ Mahindra considerations. Also, drawing parallel from similar Comviva, The Evolution of Digital and Mobile Wallets] countries will help understand India’s standing and Retrieved on 30 September, 2019 from growth plan. http://www.paymentscardsandmobile.com/wp- content/uploads/2016/10/The-Evolution-of-Digital-and- Mobile-Wallets.pdf

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[17] Pal, A., Dattathrani, S., De, R., (2017, March) [ Security in Mobile Payments: A report on User Issues, Indian Institute of Management Bangalore ] Retrieved on 30 September, 2019 from http://www.iimb.ac.in/sites/default/files/inline- files/iimb-csitm-security-issues-in-mobile-payment.pdf [18] Committee on Digital Payments constituted by Ministry of Finance, Government of India (2016, December) [ Medium Term Recommendations to Strengthen Digital Payments Ecosystem] Retrieved on 30 September, 2019 from http://finance.du.ac.in/du- finance/uploads/pdf/Reports/watal_report271216.pdf [19] RNCOS and ASSOCHAM India, M-Wallet: Scenario Post Demonetisation, Retrieved on 30 September, 2019 from http://www.assocham.org/upload/docs/M- Wallet_Report_press.pdf [20] Sen, S., (2017, January) [Mobile wallets see a soaring growth post-demonetisation, Hindustan Times] Retrieved on 30 September, 2019 from https://www.hindustantimes.com/business-news/mobile- wallets-see-a-soaring-growth-post-demonetisation/story- zwdBi3UGqG1qZD92AEF9GK.html [21] Shah, A., Roongta, P., Jain, C., Kaushik, V., & Awadhiya, A. (2016). Digital Payments 2020: The Making of a $500 Billion Ecosystem in India. The Boston Consulting Group. [22] Wadhwa, P., (2016, November ) [68% of transactions in India are cash-based: CLSA, Business Standard] Retrieved on 30 September, 2019 from http://www.business- standard.com/article/economy-policy/infographic-68-of- transactions-in-india-are-cash-based-116111400495_1.html [23] Wright G., Chopra, P., Mehta, S., Shukla, V. (2013, May) [Financial Inclusion Through Digital Financial Services] Retrieved on 30 September, 2019 from http://www.microsave.net/files/pdf/1367585756_Financial_I nclusion_Through_E_M_Banking.pdf

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