The Jaipur Digital Payments Lab...develop new knowledge in digital financial services space 01 03 02...

The Jaipur Digital Payments Lab

26th October 2017

Copyright © 2016. Sloan Group International. All rights reserved.

© 2017 Catalyst. All Rights Reserved.

BRIDGING THE FINANCIAL DIVIDE

THROUGH DIGITAL PAYMENTS

Catalyst is working to help India’s small businesses and low-income consumers unlock

the power of digital payments to access broader financial services, and create

opportunities vital to their future prosperity

Adoption & usage

of digital payments

by merchants and

consumers

Expanded

access to

financial services

like savings,

credit and

insurance

Deep and lasting

socio-economic

transformation

AN UNPRECEDENTED OPPORTUNITY TO MOVE THE NEEDLE

Technology

Introduction of open, interoperable platform technologies such as Aadhaar,

Unified Payments Interface, and the "India Stack" with a layer of innovative

apps above

Policy

Step change in government & regulatory activism with initiatives like Jan

Dhan Yojana, Direct Benefit Transfers, Small Finance and Payment Banks

to promote democratization of finance

The Indian Payments landscape is at an inflection point given two tectonic

forces and a rapidly growing base of smartphone and internet users

Aadhaar accounts

1.1 billion

Indians with internet access

450 million

Jan Dhan bank accounts

275 million

Plus phone accounts

1 billion



Arun Kumar

31 Years old,Fruit seller, Mumbai

THE BROKEN LAST MILE

Does Arun have a Rupay card?

Does it have money on it?

Does he use it to pay for goods and services?

• Transit?

• Water/ power/ cable bills?

• Food & groceries?

• Household consumables?

• Doctors?

Do local merchants accept card payments?

Do local merchants pay their suppliers digitally?



Partnering with specialized research agencies to embed structured

analytics to assess impact and sustainability of Lab interventions and

develop new knowledge in digital financial services space

01

02 03

Structured Learning

MeitY and Niti Aayog formal engagements

Regulatory Sandbox

FINposiums and Roundtables

Policies & Partnerships for Change

Building in strategic models and products

that leverage lab learnings but can be

scaled across wider geographies

Strategic Innovations

Digital

Payments Lab Implementing a set of

coordinated initiatives in a

local geographical ecosystem

to shift consumer, merchant &

supplier behavior from cash to

digital payment transactions

OUR APPROACH

Merchant segmentation, needs, behaviors & perceptions

Gender, technology & digital finance

RCTs on digital credit models

Incubator

Data-based insights for credit

IVR literacy & lead generation platform

Convening policy & regulatory agencies as well as

industry & innovation stakeholders to enable,

institutionalize and help scale successful

experiments



Partnering with

BUILDING A DIGITAL PAYMENTS

ECOSYSTEM

Our focus is on solving

coordination-based market failures

to drive routine & high-frequency payment use cases



MAPPING THE

MERCHANT’S MIND

Snapshots from a PRICE Catalyst survey of

1300 fixed store merchants in Jaipur

I AM READY TO GROW



Wholesale Stores

I want to

grow

Maintain

the same

Downsize

92%

Convenience Stores

86%

Service Providing Stores

86%

Specialty Stores

84%

I AM DIGITALLY READY



Ownership of mobile phones

Smartphone 77%

Feature phone 10%

Basic phone 7%

No phone 6%

57% have access

to Internet

43% do not have

access to Internet

97% have a bank account

82% use their

bank account

18% do not

use their bank

account

I TRANSACT PRIMARILY IN CASH & CHEQUE TODAY



Percentage of payment value received from

CUSTOMERS by type of payment method

86.4%

6.1%

1.7%

2.0%

3.8%

0.2% UPI

Mobile Wallets

PoS

Internet Banking

Cheque

Cash

Percentage of payment value made to

SUPPLIERS by type of payment method

60.5%

33.0%

5.1%

0.3%

1.0%

0.1% UPI

Mobile Wallets

PoS

Internet Banking

Cheque

Cash



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agree

Neutral

Disagree

Prefer cash for

small ticket size

Digital brings value

to business

Digital brings new

customers who wouldn't

have shopped at my store

Digital will induce

customers to spend

more with me

Remote payments can

reduce hassle of cash

collection

I BELIEVE DIGITAL PAYMENTS CAN HELP ME GROW



I WILL ADOPT DIGITAL PAYMENTS IF…

… I can pay my suppliers

digitally

… I can target buyers with

customized offers

… I can access credit from

alternative lenders

… I don’t bear an upfront

installation cost

49%

51%

Yes

No

56%

44%

61%

39%

Yes

No

Yes

No

49%

51%

Yes

No



OUR BIGGEST INSIGHT

FROM THE GROUND

Stand-alone merchant payment digitization is

just not a compelling value proposition

Instead, we need a “Trojan Horse” strategy

wherein we embed payments into a broader

workflow to drive real user value

WE IMPLEMENTED A SHARED

GO-TO-MARKET MODEL TO

REDUCE ACQUISITION COST

KEY LEARNINGS - ACTIONABLES

CARD : 10% adoption 2% sustained use

UPI : 20% adoption ? sustained use



WE WILL CATALYZE 6 INCLUSIVE DIGITAL PAYMENT ECOSYSTEMS



Pls make this silde visually appealing

Each vertical box can be labeled an “ecosystem”

It’s a matrix so horizontals cut across.. Need to

show visually

P2G payments

through

eMitras

Wholesale and

retail payments

in Dairy

Subscription

payments to

small vendors

Community-led

digital finance

in an urban

slum

Interoperable,

city-wide

digital transit

payments

FMCG retailer

to distributor

payments

Credit as a Hook: Linking small loans to digital transaction histories

Each One, Teach Many: Create champions of new technology and behavior change



Digitizing consumer payments at

eMitra centers for government

services & utility bills

P2G payments

through eMitras

Wholesale and retail

payments in Dairy

Subscription payments

to small vendors

Community-led digital

finance in an urban slum

Interoperable, city-wide

digital transit payments

FMCG retailer to

distributor payments

CU

RR

EN

T S

TA

TE

TODAY, PAYMENTS AT EMITRA CENTERS ARE 98% CASH BASED

FU

TU

RE

ST

AT

E

CAN A STREAMLINED DIGITAL PAYMENTS BUSINESS MODEL FOR EMITRA CENTERS

CREATE OPERATIONAL EFFICIENCIES AND HELP GROW THEIR BROADER BUSINESSES?



Digitizing Dairy payments between

distributors, merchants and consumers

can support a daily use case that reaches

every household in the city

P2G payments

through eMItras


payments in Dairy


to small vendors





FMCG retailer to


DAIRY TRANSACTIONS ARE CASH BASED AND INEFFICIENT

CU

RR

EN

T S

TA

TE

FU

TU

RE

ST

AT

E

DO DIGITAL COLLECTIONS CREATE ENOUGH VALUE FOR DISTRIBUTORS

TO PROVIDE ONGOING INCENTIVES FOR RETAILER PARTICIPATION?



Using remote payment solutions for

newspaper vendor collections

P2G payments

through eMItras


payments in Dairy


to small vendors





FMCG retailer to


NEWSPAPER PAYMENT COLLECTIONS IS A TEDIOUS AND COSTLY PROCESS

FOR DISTRIBUTORS AND CONSUMERS

CU

RR

EN

T S

TA

TE

CAN A DIGITAL SUBSCRIPTION MODEL CREATE ENOUGH VALUE FOR SMALL

MERCHANTS AND THEIR CUSTOMERS ALIKE TO SWITCH FROM CASH TO DIGITAL?

FU

TU

RE

ST

AT

E



BHATTA BASTI CLUSTER

Promoting awareness, adoption and

sustainable usage in a low-income

urban community

P2G payments

through eMItras


payments in Dairy


to small vendors





FMCG retailer to


*based on needs assessment exercise conducted in

Bhatta Basti with a sample size of 422 individuals

# households (approx.): 9000

Avg. household size: 5

Average Income per household

INR 3500 – 3600 per week*

(94% salaries are in cash)

Household Level mobile phone penetration: 77%*

Household level Smartphone Penetration: 29%*

<2 bank accounts per household*

Approx. 80% bank accounts are inactive due to

non-usage in the last 30 days or more

Employment Rate: 74%*

Primarily Employed as: Daily Wage Laborers, Home based

businesses

39% of employed maintain savings,

with majority keeping savings as cash

at home



AN INCLUSIVE DIGITAL FINANCE

MODEL THROUGH COMMUNITY-

BASED CHANGE AGENTS



DIGITAL CREDIT

Enabling small merchants

to move from cash to digital payments

using digital credit as a hook

Each One, Teach Many

Credit as a Hook

DOES SEAMLESS ACCESS

TO WORKING CAPITAL

LOANS INDUCE SMALL

MERCHANTS TO NUDGE

THEIR CUSTOMERS TO

ADOPT DIGITAL?

Thought Partnership

▪ Strategic “ecosystem lens” to select portfolio of coordinated

projects to move the needle

▪ Implementation partner to design end-to-end solutions,

interfaces, and hypotheses to be tested on the ground

Targeted funding

▪ Incubation grants that solve for market failures

(in collaboration with the “enlightened VC”

community)

▪ USAID Credit Loan Guarantee (50% insurance

against default)

Project Delivery

▪ On-the-ground Delivery / Project Management

Unit (PMU) to track progress

▪ Coordination across multiple stakeholders and

local/State Government actors

Action Research

▪ Behavioural research to improve interfaces and understand

motivations behind adoption/usage

▪ Periodic M&E surveys to objectively assess project impact

▪ Topical, specialized research to deep dive in certain relevant

areas (e.g., policy briefs, industry white papers)

Inform & Convene

▪ Multi sector partnership across financial services & payment

industry players, telcos, policymakers & regulators, think

tanks, NGOs and foundations

▪ Inform policy maker and regulator with evidence-based policy

recommendations

▪ Promote & disseminate learnings to broader national & global

audiences

OUR ROLE AS MARKET ENABLERS


Who

▪ Key Stakeholders

(Identify, Engage, Align)

What

▪ Solutions

▪ Sources of Value

How

▪ Distribute Value

▪ Trigger Change

THE WAY FORWARD


Business Model Validation

Institutional Support

▪ Government Agencies

▪ Financial Institutions

▪ Service Providers

Sustain & Scale

0

1 0

2

A multi-sector partnership to deliver

Hindustan Unilever Limited

IAMAI

ICICI Bank

Ideas42

Idea Payment Bank

IDFC

Indifi

ItzCash

IFC

Intellecap

Instafeez

ITC

Jaipur Dairy (Saras)

Jaipur Smart Cities Ltd.

Janalakshmi

KyePot

MeitY

Metlife Foundation

Michael & Susan Dell Foundation

Mindtree

mSwipe

Marico

MasterCard

MeraPaper

MicroSave

Mudra

NeoGrowth

NIPFP

Niti Aayog

Niyo

NPCI

Omidyar Network

PayLo

P&G

PayBee

PhonePe

PRICE ice360

Prime Ventures

Punjab National Bank

SEWA

State Bank of India

Startup Oasis

Tally

ToneTag

Uber

Visa

Vodafone Payments Bank

World Bank

World Economic Forum

Yes Bank

www.cashlesscatalyst.org

In partnership with Government of Rajasthan

Accion

Airtel Payments Bank

Aspada

Axis Bank

Basix (Sub-K)

Better Than Cash Alliance

BizOm

Boloro

CAIT

Capital First

Capital Float

CGAP

Crisil Foundation

CUTS

Damage Control

Eko

ePaisa

Ezetap

FIA

Finacus

FINO

Facebook

FTCash

Glenbrook Partners

Grameen Foundation

The Jaipur Digital Payments Lab...develop new knowledge in digital financial services space 01 03 02...

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