IMPS Merchant Payments User Group Meeting Dheeraj Bhardwaj

8/3/2019 IMPS Merchant Payments User Group Meeting Dheeraj Bhardwaj

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Interbank Mobile Payment Service

(IMPS)

Merchant Payments

User GroupMeeting


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Current merchant paymentsscenario

Remote payments

E-commerce

Face-to-face payments

Fixed POS


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E-commerce statistics

Growth of 47% to Rs 46,000 crores

Online travel industry contributes to 76% of totale-commerce

Financial services such as online insurancepayments and transactions through tradingaccounts 6%

Retailing on Internet 6%

Other online services (incl online classifieds) 5%

Digital downloads 2.4%


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POS statistics


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E-commerce usage

Barring few services such as online ticketing,Indian consumers arent shopping online. Largenumber of surfers use the Internet to look for

information about the product or service theywant to buy followed by a physical visit to a shopfor buying

E-payment preferred mode for electronic delivery

items Cash on delivery preferred mode for physical

delivery items


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POS usage

Credit card volume numbers are coming down on annualbasis

Debit card volume numbers are going up on annual basis

Number of debit cards is 12 times higher than number of

credit cards On an average, 15 transactions per credit card on annual

basis

On an average, 1 transaction per debit card on annual basis

Average transaction value for credit card transaction Rs2,800/-

Average transaction value for debit card transaction Rs1,600/-


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Electronic Payments are under-utilized

Indias retail market is worth US $ 450 billion(approx Rs 22.5 lakh crores)

Transaction value using credit/debit cards on

POS is Rs 114,206.33 crores, therebycredit/debit card transactions at POS accountsfor approx 5% of retail sales in India

5.5 lakh POS machines in India 15 million merchants in India, thereby approx

4% merchants have POS machines


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Reasons for under-utilization

Investment on POS machines

No of credit cards holders is approx 7% of all bankingcustomers

Pricing model serves as disincentive for merchants to

encourage payments by cards. Merchants discourageuse of cards for purchase of valuable goods and items

Customers use credit cards more because of creditfacility, debit cards is even more underutilized

7% account holders in India use net banking Customers reluctant to purchase online for security

reasons


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Advantages of IMPS

Number of mobile users is lot more. Mobile number can be linkedto bank account for everyone

Replacement of cash

Remote payments via website, IVR, mobile application

Fixed POS via virtual POS at retail counters

Mobile POS

No investment on POS machine for receiving payment via IMPS

Reducing the cost of issuing banks, as less cash withdrawal at ATMsand branches

Reducing cost for merchants, as efficient settlement, less risk offraud, process efficiency

Convenience, anytime, anywhere payments


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IMPS merchant payments PUSH transaction

Customer can initiate transaction through

mobile banking application and through SMS

facility provided by bank


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Transaction through SMSbanking


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Transaction through mobilebanking


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Transaction through mobilebanking


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Mobile top-up

Oxigen mobile number and MMID Payment reference Operator*Mobile number


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Mobile POS push transaction

Pizza delivery, courier, Cabs, retail POS

Customer enters the agents mobile number

and MMID, amount and payment reference

Agents mobile number and MMID linked with

merchants account at the back-end

Customer account debited and merchants

account credited

Customer and agent gets confirmation SMS


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Use cases

Insurance

DTH

Fee payments Credit card payments

Utility Bill payments

Over-the-counter payments


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IMPS merchant payments PULL transaction

Step 1 Generate OTP before transaction

Step 2 Make payment using OTP


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OTP validity

OTP can be generated through mobile banking applicationand through SMS facility provided by the Bank

OTP generation is 2-factor authentication process

Only one OTP is valid at a time

OTP valid for only one transaction successful or failure OTP is valid for 1 hour

OTP is 6-digit numeric

Transaction limit unlimited (subject to bank discretion) forOTP generated through mobile application, and Rs 5,000/-for OTP generated through SMS


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OTP generation through mobilebanking application


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OTP generation through SMS


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Make payment using OTP

Can make payment using OTP at merchant

application

Website

IVR

Mobile application

Mobile POS


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Make payment using OTP


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Mobile top-up

Customer provides OTP to the retailer Retailer prepaid balance is not debited. Oxigen account gets

credited. Retailer gets commission. Incentive for retailer to promoteIMPS

Services can be extended to DTH, railways, bill payments, bus

tickets, etc


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Mobile POS pull transaction

Agent has mobile POS application on the phone

Opens up form Receive payment from customer

Enters payment reference, amount

Asks customer to enter mobile number, MMIDand OTP

Agents mobile number (through which paymentis initiated) is linked with merchant account

Merchant account is credited and customeraccount is debited

Customer and agent get confirmation SMS


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Virtual POS

At cash counters in retail chains

Customer swipes card at the cash counter

Linked will billing system at cash counter Option to pay via IMPS

Customer enters mobile number, MMID, and

OTP Customer account is debited and retail chains

account is credited


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Mutual funds

Currently, in financial services, only Rs 2,000crores worth of transactions through onlinemethods

In mutual funds, no transactions throughcredit cards

Only debit cards and net banking methods

allowed Payment through distributors also possible

through distributor mobile POS method


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Insurance

Agent can collect payment via agent mobilePOS application. Credit directly into insurancecompany account

No investment on POS machines for insurancecompany

No need for agents to visit branch office to

submit cash, cheques Agents promote this method because of

above advantage


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E-Commerce company - Cash ondelivery

Cash on delivery preferred mode for physical delivery items

IMPS as replacement of cash on delivery

Customer places an order and opts to pay via IMPS on

delivery E-commerce company ties up with courier company

Courier company opens account with acquiring bank

The delivery agents mobile number is linked with courier

company Customer makes payment using delivery agents number

Payment is received in courier company account

SMS is received by customer as well as delivery agent


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Merchant business

Transaction fee from merchant per transaction

Deposits into merchant account with the Bank

Existing current account holders to be provided the facilityof receiving payments via IMPS, thereby widening

merchant network No investment of POS machines for making facility available

to merchants

As an issuer, less cash withdrawal at ATMs and branches,therefore lesser cost of transaction

Promotion on the ground through various channels Access channel (mobile) available widely

Fixed and mobile POS facility, payments anytime, anywhere


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Current status

Pilot launch with Union Bank of India and Kotak Mahindra Bank

Union Bank of India as Issuer and Kotak Mahindra as both Issuerand Acquirer

Kotak credit cards is pilot merchant for PUSH transaction

Times of Money is pilot merchant for PULL transaction

SBI development and testing completed, go-live in progress

Oxigen is pilot merchant for PUSH and PULL transaction

ICICI Bank certification in progress. Expected to go-live by middle ofFebruary

Canara Bank certification after SBI go-live. Expected to go-live by

middle of March Citi Bank, Axis Bank in development phase. Certification expected

to start by end february, and complete by 15th April


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Way forward

Let us know your interest in joining IMPSmerchant payments, and provide theimplementation plan

Finalize the vendor

Start the development

Certification process 6-7 weeks

One pilot merchant for PUSH and one for PULL

Currently 8 pilot banks under certification

Certification can be started after these 8 banks,and plan shall be shared

IMPS Merchant Payments User Group Meeting Dheeraj Bhardwaj

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Transcript of IMPS Merchant Payments User Group Meeting Dheeraj Bhardwaj