Exploring Opportunities in Mobile Payments: Where Do We Stand?
Mobile payments are helping the digital India initiative by enabling users to make transactions completely on their smartphones.
Gone are the days when people had to stand in long queues to make simple payments. Of late, mobile payments have ushered in a new era of transactions in the global financial landscape. We are now able to initiate and complete transactions solely over our smartphones. The ability to carry out transactions without the hassles of visiting various offices has helped the end-user in managing his finances better which, in turn, improves their credit score and their overall capability to borrow.
The mobile payment scenario is still in its early stages, not only in India, but also on a global level. While there is widespread awareness about tech-driven transactions, the actual usage numbers are downright disappointing. Among those who are making regular use of mobile payments, millennials and higher-income households are on top. So why does this gap between awareness and adoption exist?
Making cash payments is a behaviour that is entrenched into us and to use mobile payments we need a clear value proposition. Frankly, mobile wallets are nothing more than a little advance version of plastic money like credit cards and debit cards. When you are at a store, you might as well hand your credit/debit card for payment or just tap your contactless card at an NFC-enabled terminal. Carrying out transactions on mobile is not adding much value for an end user. And this is what the world is working towards in order to encourage more people to adopt the mobile payments technology– making it more practical and useful.
Mobile Payments Scenario in India
On 8th November 2016, the government demonetised Rs 500 and Rs 1000 notes in the country in a move to curb black money. But somewhere along the way, the idea was diverted towards promoting a cashless culture in India. Over the last one year, India has made significant development in creating a tech-driven environment for payments. Peer-to-peer payments, mobile wallets, Bharat Interface for Money (BHIM), Unified Payments Interface (UPI), payments banks and blockchain technology are a few terms that have become the talk of the town lately.
Despite the fact that we are making good progress in the field of mobile payments, we have a long way to go before matching the digital payment trends of developed nations. The National Payments Corporation of India (NPCI), that monitors and manages all retail payments in the country, claims that the digital payments landscape saw a paradigm shift post demonetisation. The usage of its RuPay cards shot up; app-based payment systems witnessed boom in their businesses.
The following have been major disruptors for the digital payments scenario in India-
Open API – API refers to Application Programming Interface and an open API enables applications to communicate with each other. It allows applications to access data from other applications. The government, under the Digital India initiative, mandated an open API policy in order to reduce complexities in transactions for the users. The five key programmes for which the open API policy has been mandated are e-KYC, e-Sign, Aadhaar, proposed privacy-protected data sharing and UPI. The cost and time involved in offline authentication will be significantly reduced with this move.
Biometrics – A number of people is still apprehensive about digital payments being highly vulnerable to cyber-attacks. The government has given much attention to the involvement of biometrics in mobile payments in order to reduce fraud and make such transactions more secure. Banks are committed towards developing a system that uses a customer’s unique identification to carry out transactions. Aadhaar Pay- a biometric enabled payments system- is also to be launched.
UPI – The Unified Payment Interface (UPI) also came out as a great step in the field of mobile payments. It enables users to transfer funds through a Virtual Payment Address (VPA). There is no need to share your account details with anyone nor are there any charges for transferring funds through UPI. UPI is simpler and lets you transfer funds instantly.
Robotics and AI – Several banking giants have entered into the ‘Artificial Intelligence’ arena in the form of chatbots. Soon the technology will drive the digital payments landscape making things easier for the users.
Apart from these, the advent of cryptocurrency and blockchain technology has also revolutionised the digital payments scenario in the country. The NPCI also launched Bharat Bill Payment System which furthers the financial inclusion motive of the Indian government.
From the recent trends, it is clear that the banks and financial institutions want to keep up with what their customers expect. And a user, nowadays, wants quick, hassle-free, safe and secure banking system. Realizing this need, several private institutions came forward to rejig their systems especially to make banking simpler for the end-user. Obstacles exist in the way of completely digitizing banking and payments systems in the country and bringing it at the user’s palm.
Besides banks, businesses will also work towards reducing the role of cash in their transactions. Currently, a lot of businesses are averse about it as setting up the infrastructure for electronic payments is a costly affair and they do not want to bear the same. Possibilities of technical or human mistakes, cyber-attacks, complex procedure, etc. are a few things that users have complained about in the past. Merchant are working on improving these fronts. Once merchants become aware of mobile payments and incorporate the same into their working, only then there can be widespread adoption of the latest mobile payment technologies.
Mobile payments are helping the digital India initiative by enabling users to make transactions completely on their smartphones. The system has to be seamless and it should have more practicality in the current environment. Mobile payment system should benefit both sellers and buyers equally in order to create a balanced ecosystem. Effort is required in the field of making these transactions safer and more secure for the users. It is the millennial population that is the most active in the field but other are expected to follow suit. It will take time for a diverse country like India to adopt a system that matches everyone’s needs equally.
About the Author: This article is contributed by Paisabazaar.com