SMARTER PAYMENTS TRACKER APRIL 2019 In India, Faster Payments Deliver ‘Instant Gratification’ To Migrants – Feature Story (p. 8) NEWS AND TRENDS Currencies Direct launches batch payments platform – p. 12 DEEP DIVE Speed and security needs are pushing push payments – p. 18 SMARTER PAYMENTS 2 | © 2019 PYMNTS.com All Rights Reserved 04 08 How financial services Ritesh Pai, chief digital officer companies are tackling for YES Bank, explains how the slow remittances and country’s faster payment systems batch payments are providing many migrant workers with “instant gratification” 12 18 The latest headlines An in-depth look at how push from around the smarter payments can enable faster, payments space more secure transactions between merchants and consumers ACKNOWLEDGMENT The Smarter Payments Tracker is done in collaboration with InstaReM, 22 and PYMNTS is grateful for the company’s support and insight. Information on PYMNTS.com PYMNTS.com retains full editorial and InstaReM control over the findings presented, as well as the methodology and data analysis. © 2019 PYMNTS.com All Rights Reserved | 3 PAGE 4 4 | © 2019 PYMNTS.com All Rights Reserved WHAT’S INSIDE Money in waiting is far less valuable than that which is im- more to cross-border payments than simply moving mon- mediately accessible for purchases, investments or bills. ey overseas. Slow payments present big problems for SMBs (SMBs) This inaugural edition of the Smarter Payments Tracker, a in particular, as cash-flow issues can have ripple effects PYMNTS and InstaReM collaboration, will investigate how on their supply chains. Unlike their larger counterparts, the flow of money and data between borders is creating a SMBs don’t always have sizable budgets that allow them to new landscape in which payment data is as valuable as the weather payment delays. Those awaiting payments from funds being moved. It also explores the vital roles speed overseas partners could be forced to stall payrolls, let go and cost play in international payments and remittances, of advantageous investments or even go out of business. and how businesses are minimizing frictions. It isn’t just SMBs that are affected by slow payments, how- ever. Workers sending remittances to family members are AROUND THE SMARTER well aware that funds may be needed immediately to pay PAYMENTS WORLD medical bills or address other pressing needs. The global remittances market is surging, according to a Payments speed bumps manifest in myriad ways. new report from the World Bank, but so are the fees be- Consumers may have to undertake the slow process of vis- ing levied on these payments. The market is expected to iting financial institutions (FIs) and filling out paperwork reach $550 billion this year, but the average bank charges before they can transmit the funds. Should a clerical er- migrants an 11 percent fee on their remittances, seriously ror happen, an account-to-account (A2A) transaction can affecting the value of working abroad. Four years ago, the end up seriously delayed as a result, transmitting through United Nations (U.N.) set a goal to reduce those fees to several banks before it’s returned, accruing fees along the only 3 percent, but the number continues to increase. way. Financial services companies and FIs are upping their Money transfer operators are offering low-fee remittances efforts to address these frictions and make international in response, hoping to leverage this to stand out among the payments faster and more cost-effective. After all, there’s competition. South African money transfer operator Xago, © 2019 PYMNTS.com All Rights Reserved | 5 WHAT’S INSIDE for example, has tapped Ripple’s technology to do just that. Executive The company hopes the Ripple tech will help it provide INSIGHT more-streamlined transactions at lower costs. Tech startup BeepTool is also providing low-cost remittanc- es in Africa. Nigerians send $24 billion in remittances back home each year, and BeepTool’s new app offers swift pay- Prajit Nanu, co-founder and CEO of InstaReM, ments without the card fees. Transfers can be sent via the explains how customer expectations are app to mobile wallets, bank accounts and even into bill- driving FIs to adopt new infrastructure models ing systems. and enable real-time payments for individuals and businesses. For more on these stories and other headlines from around the smarter payments space, read the Tracker’s News and Trends section (p. 12). “Imagine if you’re a bank [customer] in Asia and your son calls you at midnight Asia time DEEP DIVE: SPEED AND SECURITY and says, ‘I need some money right now.’ If NEEDS ARE PUSHING PUSH you send it using the bank channels today, PAYMENTS the money will reach [your son] 48 hours later. But if you use real-time payments infra- Merchants must be confident that their customers will de- structure, then the money will be in your son’s liver timely payments to keep commerce flowing, while bank account in less than 10 minutes. These customers need to know that their payment credentials are very important cases that are driving ac- and other personally identifiable information (PII) will be count-to-account [services and] restructuring handled securely. Push payments are increasingly being new products for consumers and [SMBs], eyed as a way to bring greater confidence to both sides of a which is driving real growth. transaction. This month’s Deep Dive (p. 18) explores what’s driving interest in push payments, and where the tech- The person driving change is the consumer, nology may smooth out and secure consumer payments, because the consumer now has the expec- business-to-business (B2B) supplier transactions and busi- tation of an instant economic world. Earlier, ness-to-consumer (B2C) loans and payroll. if [you] wished to book a cab, you’d have to wait 30 minutes. Now we use [rideshar- IN INDIA, FASTER PAYMENTS ing] platforms to get cabs [within] the next DELIVER ‘INSTANT GRATIFICATION’ few minutes. TO MIGRANTS Everything is becoming instant, so expecta- Sending earnings back home has historically been a fric- tions of payments are also instant. Gone are tion-filled experience for India’s nearly 100 million migrant the days when people are willing to wait 48 workers. Prior to the release of the nation’s faster pay- to 72 hours for a payment to reach [them]. ments systems, workers had to send cash via the postal The buyer’s behavior is changing, which is service or a courier, leaving them wondering if their funds pushing banks to move at a faster pace in or- made it into the right hands. In this Tracker’s Feature Story der to make changes to their infrastructure (p. 8), Ritesh Pai, chief digital officer of YES Bank, explains to actually start offering real-time payment how real-time assurances and faster remittances could be services.” game-changers for this sizable labor pool. 6 | © 2019 PYMNTS.com All Rights Reserved WHAT’S INSIDE $7B Amount Nigerians spend in fees each year to send remittances to the country $900B Expected value of global cross-border eCommerce sales by 2020 1.7M Total number of merchants participating in Singtel’s VIA cross-border mobile payments alliance $689B Estimated total value of global remittances in 2018 11% Average amount banks charged to send remittances in Q1 2019 FIVE FAST FACTS © 2019 PYMNTS.com All Rights Reserved | 7 PAGE 8 FEATURE STORY 8 | © 2019 PYMNTS.com All Rights Reserved In India, Faster Payments Deliver ‘Instant Gratification’ To Migrants Migrants make up a substantial portion of the economy Ritesh Pai, chief digital officer for India’s YES Bank, point- in India. By some recent accounts, more than 100 million ed out that India’s heavy reliance on cash in the past meant migrants are participating in the nation’s workforce — one- that workers had to send their wages back home via the fifth of its labor pool. Many of these workers travel from postal service or a cash courier — processes that could rural, low-income regions, hoping that work opportunities take days, leaving workers worrying about their funds’ in urban areas will enable them to support their families. whereabouts. As such, it’s common practice for these workers to send India’s financial ecosystem underwent several shifts after a portion of their wages home to their relatives. Many of the country made the move to demonetize, resulting in pay- these workers have traditionally been paid in cash, howev- ment rails such as the Immediate Payment Service (IMPS) er, meaning they’re likely to encounter uncertainties when it and the Unified Payments Interface (UPI). These systems, comes to transferring money. © 2019 PYMNTS.com All Rights Reserved | 9 FEATURE STORY Pai said, are pushing the adoption of electronic payments to where he’s getting instant gratification before he leaves among the country’s vast base of migrant workers. the outlet.” “There is so much operational efficiency,” he said. “From an The speed of confirmation is just as important as the speed instant gratification standpoint, the moment the money is of delivery because workers can feel confident that the sent, [they] get a notification that the beneficiary’s account transfer was successful. Services like these, Pai said, will has been credited. … The speed is immense.” help spur broader adoption among migrant workers who are looking to securely and quickly send funds. A REMITTANCES GAME-CHANGER Workers’ anxieties don’t just involve speed and security, IMPS and UPI are proving to be game-changers for India’s however. Remittances are associated with high fees, which migrant community, Pai said, as FIs are able to connect can eat away at the total value of the transfer. Pai believes, to these networks and offer fast transfers.