'Safe transaction experience is the key to acceptance'

Payments, as we knew a decade ago, meant transacting in hard cash or writing cheques. Slowly came the online wave and changed our lifestyles. We got so influenced by the ease of online usage, that we started trusting money matters with the internet and online transactions became an integral part of our lives. Although this technology was available from the mid 1990s, acceptance was initially slow, until internet access increased.

By 2000, adoption of electronic payment systems started to dramatically increase. Web, mobile and tablets started getting designed to facilitate online transactions and that is when the concept of e-wallets was introduced. Infact, the increase in the number of mobile users globally has led to an increase in the user base of e-payment subscribers.
As per a survey report on mobile economy, half of the world’s population now has a mobile subscription—up from just one in five, 10 years ago. An additional one billion subscribers are predicted by 2020, taking the global penetration rate to approximately 60%, which means a proportionate increment in online payments.

Benifits galore

We also need to understand the benefits of online transactions from every users’ perspective. From the consumer’s point of view, electronic payment is cheaper, faster, and more convenient than writing, posting and reconciling cheques or even dealing with cash. Also, usage of debit and credit cards of various bank accounts makes it much more convenient than running from one bank to the other.

From the merchants’ perspective, online transaction means business transactions on the go. They get the flexibility to accept payments anywhere, anytime and due to this are able to enhance customer experience and increase sales opportunities. Since, merchants can also provide their customer with multiple options to pay, the adoption of POS/MPOS devices has also increased.

Ecommerce push

And this incremental growth in online payments space is credited to ecommerce. Companies like Amazon, Flipkart, Ebay, Paytm, Mobikwik and others have been successful in creating more online customers on web and mobile based platforms than traditional brick and mortar stores. It won’t be wrong to say that ecommerce introduced us to an online transaction culture which changed the way we look at monetary values. Furthermore, with the government trying to create a cashless economy with features like IMPS and UPI, we are sure to experience better online payment services. UPI, which is expected to make ecommerce transactions easier, will also facilitate micropayments and person-to-person payments. One will be able to use multiple e-wallets seamlessly, get real time and continuous service updates and use products of any banks on their phones through this feature.

However, are we as a nation ready to become a cashless society is still a debatable topic. We still have a long road map to follow which requires building better and stronger infrastructures in terms of internet connectivity. Online business thrives only on internet and that is still a challenge, even in the metros. Statistics show that POS/MPOS devices have hardly penetrated roughly 5% of the retail universe and cost of servicing these devices are also high. Even now, 60% of the ecommerce business is cash on delivery. This is primarily because people still don’t trust online payment gateways and there is a huge gap in the knowledge about the same. While many consider mobile payments to be insecure, larger part of our nation is uneducated and do not even have bank accounts. Merchants also need to be educated along with being incentivised, for doing online transactions. It is difficult for them to let go the traditional cash business model. Also, our country exhibits unique transactional behaviors—35% of our population is above 35 years of age and they are either slow or not interested in the online segment, while 50% is below 25 years of age and is enthusiastic about e-payment and ecommerce but has less cash to spend.

Long journey till now

Having said the above, we have definitely come a long way and developed a great platform for the online payment industry. As a nation we have crossed the phase 1 of payment revolution which was to use banking services over mobile.  Now, as we are in the phase two, we shall see more tractions in the market with greater consumer adoption happening. And the Digital India Initiative of 2015 has been a good influencer in precipitating and pushing online payments. E-portals like Uber, Ola, bookmyshow, freecharge and others have established a sustainable behaviour and are witnessing increased acceptance from the customers. Banks are also working hard towards increasing the user base through net banking, financial inclusions and introducing features for optimal use of cards.

We know that smartphone penetration is getting bigger and better, but, only mobile based strategies may not help the industry. Need of the hour is to have models that will create a great consumer experience, offer security features and enable easy transactions. Online businesses into logistics, food, grocery and personal products are indicators of increased industry adoption. Even an increase in the acceptance of multi-category products will generate new users and allow current users to enjoy more services and give them reasons to stay online and do digital payments.

Customer is the king

Initiatives like Payments Bank, Bharat Bill Pay of RBI and Unified Payment Interface of NPCI, have all been devised to enable consumers with the best online payment services and these will change the course of the industry in the next 3-4 years’ time.  Customer was the king earlier, customer is the king today and a good and safe transaction experience for consumers is the key to acceptance. And, India is on the verge of unleashing the digital adoption.

(The author is the Managing Director at CyberPlat India)