On digital india

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Digital IndiaGrowth is Good

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From Barter To Cashless


History of Money

Source: Telegraph/The History Of Money, Investopedia/ Roots Of Money

Barter Coins Paper Money/Cheque

Electronic Payments

Digital Payments


Glossary

A Cashless Economy is one in which all the transactions are

done using cards or digital means with the minimal

circulation of physical currency.

Demonetization is the act of taking away a currency unit of its status as legal tender. It is

mainly used to combat inflation, to combat corruption, and to discourage a cash system.

A Digital Wallet refers to an electronic device that allows an

individual to make electronic transactions without using debit

or credit cards.

Cashless Economy Demonetization Digital Wallet

Digital payment refers to a system that facilitates the acceptance of electronic

payment for online transactions. Common digital payments instruments include

debit/credit cards, digital wallets, NEFT, wire transfers,

and others.

(UPI) Unified Payments Interface is a payment system

that allows money transfer between any two bank

accounts by using a smartphone without the hassle

of typing credit card details, IFSC code, or net

banking/wallet passwords.

USSD (Unstructured Supplementary Service Data)

helps with mobile financial services (MFS) with communication

between customers and their mobile payments platform. It is currently the best technology

available to provide MFS to low-income individuals.

Digital Payment UPI USSD

Source: Wikipedia


First Off, Digital Payments Globally


Evolution Of Consumer Digital Payments Globally

Source: BCG

Source: The Economic Times, 2016 Market Report by Fortumo

Digital Payments Are Growing Rapidly With The Changing Needs Of Consumers


The Ongoing Digital/ Technology Revolution 01

02

03

04

More Demanding Customer Expectations For Immediate

Payments

‘Enabling’ Regulations

Entry Of Non-traditional Players

For the first time In Year 2015, China surpassed U.K. & South Korea in non-cashtransaction volumes

Cards are the fastest growing non-cash payments instrument globally since 2010

Four Seismic Shifts In The Global Landscape

Source: Digital Payments 2020 Report by BCG, World Payments Report 2016 from Capgemini and BNP Pariba

More Banks Are Recognizing The Need To Adopt A Digital-First Mindset To Provide Digital Offerings


Now, Digital Payments

In India


Plastic Card

Unstructured SupplementaryService Data

Aadhaar Enabled Payment System

Unified Payment Interface

Mobile Wallet

Modes Of Digital Payments

The New Way To PaySource: Google Search

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Roadmap Of Digital Payments Products In India

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Source: Nasscom Payment Report 2016

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Changing Consumer Landscape In India

2014 2016 2018

Users 22.6 Crore 32.1 Crore 41.1 Crore

Penetration (% of mobile users) 18.30% 25.40% 31.70%

2014 2016 2018

Users 12.3 Crore 20.4 Crore 27.9 Crore

Penetration (% of mobile users) 21.2% 29.8% 36.0%

Internet Users & Their Penetration In India

Smartphone Users & Their Penetration In India83% Of Indians Don't Own A Smart Phone

Indian consumers are changing at a pacefar greater than that foreseen. This hasbeen the result of several drivers, whoseimpact has strengthened exponentiallyover the years.

Drivers:

Changing incomes and demographicprofiles of consumers

Growing access to the internet andgreatly increased use of smartphones

Growing health and environmentalconsciousness

Technological innovation

Rising complexity of decision –makingfor consumers

Source: 2016 market report by Fortumo


Digital Payments are creeping into our lives


Digital Payment: Triggers Of Usage


Source:


Influencing Attributes That Define The Evolution In Digital Landscape

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The Face Of Digitization:

Pre-Demonetization

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Cash As % Of GDP

Source: Economic times

Sweden 2% UK 3.36%

USA 7.46%Denmark 3.38%

India 12.42%

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India- Before Demonetization

Source: PwC-Disrupting Cash, 2014 & RBI

50% Of The Indian Population Did Not Have Access To Credit Or Debit Card

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The Face Of Digitization:

Post-Demonetization

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India- After Demonetization

Need

Government

Merchants Providers

Customer

Challenges with cash:Cost of managing cash in India is 24Thousand Crore P.A Tracking transaction for revenue generationis difficult

Opportunities: Reduction in lost sales Reduced processing time

Cost Effective: Govt. might extend subsidy

Convenience: 24*7 availability of currency, paymenttransfer Banking reach is limited

Better offers, deals & discounts

Technology Increasing in-app payments Mobile based financial transaction on rise

Bank Increase number of transactions

Source: Cost Of Cash In India Report


Growth Pattern After November 8th, 2016

Number Of Transactions Per Day

Source: Ravi Shankar Prasad Official

The Acceptance Of New Digital Payment Is A Welcome Note For The Future of Cashless Economy


RuPay, Card Usage Jumps Manifold

Source: Digital India

India Treads The Path Of A Cashless Economy


Inflow Of Deposit

Source: Deutsche Bank

Massive Deposit Bonanza For Banks


Government Plans To Move India Away From Dependence On Cash

462573562

801

0102030405060708090

Apr'14 Apr'15

No. Of Card Transaction (In Lakh)

Credit Card Debit Card

1460

870

1790

1150

020406080

100120140160180200

Apr'14 Apr'15

Amount Of Card Transaction ( Crore)

Credit Card Debit Card

Card Payments: Is This The Saviour?

Source: RBI, RBI Media Reports

Demonetization Will Pace-Up Digital Payments In A Very Short Span


What Has Changed?


Moving Towards A ‘Non-Cash’ Society

Source: BCG Analysis, Euromonitor Passport, 2015

92%89%

78%

60%

41%

8% 11%

22%

40%

59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2010 2015 2020 2025

Cash Non CashSource: BCG Analysis, Euromonitor Passport, 2015

e eCash: 5 yearCAGR 0.8% 2.5% 5.0% 7.5%

2023e

2018e: The Point Of Inflection Where Noncash Payments Will Overtake Cash

2018e

2023e: The Point Of Inflection Where Noncash Payments Will Overtake Cash


The Party Has Just Begun For Digital Wallets In India

A fortnight after the government withdrew old Rs 500 and Rs 1,000 currency notes:

The number of users for Paytm surged to 1580 Lakh from 1500 Lakh The number of Mobikwik 400 Lakh from 350 Lakh respectively


s

M-Wallet Explained

Source: Respective Marketing Information

Go to the Paytm App

Paytm The New Kid On The Block


s

Paytm: Payment Process

Source: Respective Marketing Information


Cash-On-Delivery is dipping, eWallet Is skyrocketing

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Source: Indian Retailers, Rocket Bazaar

• 30% decline in cash on delivery orders post demonetization

• Delivery returns climb 50% for major e-commerce marketplaces

Increased by 59% after demonization

Indian e-commerce growth projection cut from 75% to 55.5% In 2016

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Around The World In 60 Seconds


Leading Digital Wallets, Globally


Apple Pay

Apple Pay is Apple’s proprietary digitalwallet. It utilizes NFC technology and canbe used in many locations that havecontactless terminals.

Android Pay

Android Pay uses NFC technology to enable payments by tapping a phone to

an NFC-enabled terminal.

PayPal

PayPal is best known as an internet-based digital wallet for paying for

purchases from shopping websites.

Paytm

Paytm Wallet can be used to buy goodsand avail services online & offline. It canbe easily recharged via net banking anddebit & credit cards.

FreeCharge

FreeCharge lets users recharge anyprepaid mobile phone, postpaid mobile,electricity bill payments, DTH and datacard in India.

PayUMoney

PayUMoney is an e-wallet service inIndia. The wallet empowers to makeonline payment via credit cards, debitcards, netbanking etc.

Alipay

Chillr lets users send money in seconds to anyone in phone book, without having

to know their account number, IFSC code, or waiting for OTP.

Oxigen Wallet

Oxigen Wallet allows users to top-up money and use it for mobile data

recharge, DTH and data card recharge.

MobiKwik

MobiKwik can also be used to recharge mobiles and pay bills, but it's also

accepted across merchants such as BookMyShow, eBay etc.

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The mWallet leaders - Alipay, M-PESA & bKash

Around 50% market share in online payments

Around 78% market share in mobile payments

Source: pymnts.com

More than 100 Million Alipay wallet users have made $148 Billion worth of payments through mobile phones

Alipay processed 710 Million payment transactions

It processed 85,900 transactions per second

Source: globalpaymentsummit.com

Kenyans made 4.1 Billion M-Pesa transactions in 2015

M-Pesa total transactions worth $52.6 billion in the year 2015

42% of Kenya GDP Transacted on M-PESA in 2014-15

Now Process 14 Million transactions per day

M-Pesa now stands at 21 Million customers

Source: bloomberg.com, nation.co.ke

24 Million Customers Using Mobile Money

30,000 merchants accepting bKash

Monthly transaction volume hasexceeded USD 7.5 Million.

In June 2016, 700 organizations usedmobile money


Barriers To

Digital Payment Adoption


Key Barriers To Digital Payment Adoption


Source:


Complexities of Digitization

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Source: Pew Research Centre, 2016


83% Of Indians Don't Own A Smart Phone, A Prerequisite For Most Banking Apps

The Smartphone Abyss In India

India Still Has An Inadequate Telecom Network, Which Fails To Reach 250 Million Smartphone Users


Processing capacity: The sudden upsurge in digital payment transactions will put a severe strain on the processinginfrastructure. Strain on the processing capacity will lead to customer and merchant dissatisfaction and questions be raisedon the integrity of the payments systems.

Security of IT systems: The unstructured and mostly unplanned adoption of new payment methods raises pertinentquestions on the security and robustness of the IT systems on which these payment methods are being run.

Security of the Mobile Apps: In fact, Qualcomm has issued a public warning that none of the digital wallets in India aresafe from a hardware security point of view.

Social Engineering: The serpentine queues at banks and ATMs has accentuated the Jugaad mindset in India.Consumers are cutting corners and adopting short cuts to beat the rush to withdraw cash. Indian consumers; likeeverywhere else and perhaps more, are vulnerable to sharing passwords, PINs and other secure information thatcompromise their accounts.

What The Experts Have To Say

Roadblocks On The Digital Route For India

Source: Sriram's article

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July 2016

Internet banned in Kashmir during protest over thekilling of Burhan Wani

September 2015

Mobile data services blocked in Godhara, Gujarat,as a precautionary measure during the immersionof the Ganesh idols.

August 2015

Internet services blocked for six days in Gujaratduring the Patider reservation agitation

March 2015

Internet and mobile data services blocked inNagaland for two days due to a mob lynching

In The Name Of SecuritySome Recent Bans

Top 5 Countries By Numbers Of Shutdowns

22 22

86

3

India Iraq Syria Pakistan Turkey

Internet – The Key To Cashless Transactions

This entirely plausible scenario is definitely bad news for a digital economy

Shutdowns From June 2015 To May 2016

22 The number of times Indian ISP’s were shut down during this period.

70.5 The number of days of internet blackout

81 Instances of internet black outs in 19 countries

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A Fact To Ponder Over

NEW VULNERABILITIES

Source: Brookings Institution, Boston Consulting Group

While Governments Push Digital Transactions And The Potential Of The Online Economy, Internet Breakdowns Have Serious Financial Consequences


Indian Payment Industry:

Revenue Opportunity


Digital Payments: The Making Of A $500 Billion Ecosystem By 2020

Over 10 Million merchants establishments will accept digital /mobile payments ‘Aadhaar’ Enabled Payment System (AEPS) to provide ease in banking facility to semi-urban and rural areas Modified UPI will be a game changer

The Future of Digital Payments

Contact-less payments Internet of Things Block Chain Voice-based Payments Biometric / Iris Authentication Through Mobiles

Will Any Of These Take Off?


With A Transaction Fee Ranging Between 0.50 - 0.75 % (For B2B) And 2 % (For P2P), The Indian Digital Payments Industry Could Be Worth Approximately USD 5 Billion In Revenues By 2020

Source: BCG –Google digital payments India 2020:2016


56

4

17

224

1781

12

09

Currently G2B & G2G kept out of scope due to limited mobile update in future


Special Incentives To Encourage Digital Payments

Efforts: 02 POS devices will be deployed in each of 1 Lakh villages with the population of less than 10,000 / Rural Regional Banks and Cooperative Banks to issue “Rupay kisan Cards” to 4.32 crore Kisan Credit Card holders

Benefits: This will benefit farmers with the facility to transact cashlessely in their villages for agri needs

Efforts: Discount of 0.75% on digital payments at Central Govt. Petroleum PSUs

Benefits: This will reduce the cash requirement of nearly Rs. 2 Lakh per year at petrol pumps

Efforts: Free Accidental insurance upto Rs. 10 Lakh on buying online tickets in Railways

Benefits: It is expected that another 20% passengers may shift to digital payments

Efforts: Discount of 0.5% for monthly or seasonal tickets on digital payments from 1st Jan 2017 on suburban railway network

Benefits: As passengers will shift to digital means the cash requirement may get reduced by Rs. 1,000 crore per year in near future

Efforts: No service tax on digital transaction charges/ MDR (Merchant Discount Rate) upto Rs. 2000 per transaction

•10% discount for toll payment on National Highways using RFID card/ Fast Tags in 2016-17

Efforts: Public sector banks advised to not charge more than Rs. 100 per month as rental for POS terminals/ Micro ATMs/ mobile POS from merchants

Benefits: Nearly 6.5 Lakh machines by Public Sector Banks have been issued to merchants• With lower rentals, more merchants will install such machines and promote digital transactions

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Indian Payment Industry: Revenue Opportunity


Unified Payments Interface (UPI)

Aadhar Card Verification

Block Chains

Internet Of Things

Contactless Payment

Digital Wallet / M-Payment/ P2M payment

Voice Based Payments

Biometrics

Growth

Source: BCG –Google digital payments India 2020:2016


Digital Payments Industry To Generate Revenue Of $5 Billion By 2020


Digital Payment Channels Now In India



NPCI (National Payment Corporation Of India)The Payment Ecosystem Of India



Thank You!

Sriram NatarajanChief Operating Officer

Quatrro Processing ServicesEmail: [email protected]

Website: www.quatrroprocessing.com

mailto:[email protected]

http://www.quatrroprocessing.com/

mailto:[email protected]

On digital india

Economy & Finance

Transcript of On digital india