Interview

‘India moving fast towards cashless transactions’

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Although the use of cash for monetary transactions in India is among the highest in the world, the CAGR of 10 percent in the digital payments industry from 2010-2013 is an encouraging sign, feels Anand Ramachandran, CFO, TechProcess Payment Services Ltd

 

Tell us something about TechProcess Payment Services Ltd.

TechProcess Payment Services Ltd has been pioneer in electronic payments in India since 2000, the year when it set up BillJunction.com – India’s first electronic bill presentment and payment (EBPP) service. In addition, we established a pan-India infrastructure for Electronic Clearing System (ECS) with India’s banks to facilitate the payment of utility bills, mutual funds, insurance, education and much more. TechProcess Payment Services Ltd is the only payment service provider in India which offers multi-mode payment solutions under one platform. Our next generation platform supports all regulated non-cash modes of electronic payments, such as cards, net banking, mobile payments, ECS/ACH, cheque truncation, RTGS and NEFT.

The company has been managing the evolving e-payments ecosystem in India through its innovative suite of cloud-based payment platforms, which have been adopted by leading banks, government agencies, corporate clients, utility providers and educational institutions.

TechProcess is backed by investors like Nokia Growth Partners, Battery Ventures, Greylock Partners, ICICI Ventures and W Capital, and processed over 130 million transactions in FY2013-14. The company is also working with the Reserve Bank of India to implement its proposed Bharat Bill Payment System.

What mobile payment solutions are being offered from TechProcess?

TechProcess believes that mobile is an important payment channel, but it needs to converge with existing payment modes to offer a seamless interoperable experience to the consumer. It has become more relevant with the growth of smartphones which is blurring the divide between online and mobile channels.

At present, TechProcess facilitates mobile payments through IMPS – an instant, 24X7, Inter-bank electronic fund transfer service which can be initiated through mobile devices, SMS, USSD and IVR.

What are the various sectors where TechProcess payment solutions can be used and how? Please talk about some successfully implemented payment systems.

We endeavor to provide industry-specific solutions to help our customers transact efficiently, and we do not limit ourselves to any specific sector. We have deployed services to nationwide banks and enterprises and other multiple sectors in order to provide a friction free payments experience for their end consumers. Our focus areas include insurance, mutual funds, retail lending, electricity utilities, telecom and e-commerce. Lately, we have also seen a tremendous traction in higher education and government; these are sectors which are poised for a vertical take-off in digital transactions.

What challenges are you facing in India with regard to reluctance to use non-cash modes of payments?

We believe that presently, India is at an inflection point where adoption of electronic payment modes is increasing every single day. Although the use of cash for monetary transactions here is among the highest in the world, the compounded annual growth of 10 percent seen in the digital payments industry from 2010 to 2013 is an encouraging sign. According to a report by the Internet and Mobile Association of India (IAMAI), digital payments in India is expected to touch Rs. 1.2 trillion by December 2014, a 40 percent increase from Rs 85,800 crore the previous year, which is propelled by growing Internet penetration, growth in e-commerce and ease in online payments. The best example of the case can be witnessed in e-commerce portals which are clocking more sales than brick and mortar establishments this Diwali.

How do you react to the traditional ‘cash economy’ of India?

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It is ironical that despite having about 400 million debit cards, 20 million credit cards and most savings accounts being e-enabled, people still use cards most of the time to withdraw cash from ATMs which in turn increases the so-called ‘cash economy’. This scenario is not surprising as Indians’ cultural affinity to cash, lack of knowledge, taxation, and most importantly, lack of a nationwide electronic payment acceptance network contributes to this situation. There are just over a million Point-of-Sale (PoS) machines in a nation like India, when it is estimated to have more than 150 million outlets.

It is ironical that despite having about 400 million debit cards, 20 million credit cards and most savings accounts being e-enabled, people still use cards most of the time to withdraw cash from ATMs which in turn increases the so-called ‘cash economy’. This scenario is not surprising as Indians’ cultural affinity to cash, lack of knowledge, taxation, and most importantly, lack of a nationwide electronic payment acceptance network contributes to this situation. There are just over a million Point-of-Sale (PoS) machines in a nation like India, when it is estimated to have more than 150 million outlets.

Both the Government and the RBI have taken initiatives to encourage adoption of digital payment modes. The PM’s Jan Dhan Yojana programme has been introduced to promote financial inclusion by opening bank accounts and empowering citizens with a RuPay debit card. This would be in conjunction with the Digital India programme to augment Internet penetration and access of services online that can be taken care of by payment services companies like us. Government subsidies worth Rs 2.93 trillion would mean 4.13 billion electronic payment transactions annually. Besides, RBI’s guidelines to curb the quantum of free ATM transactions, setting up of a Centralised Bill Payment System point and the regulator’s thrust to wean customers away from the usage of cash will also give it a boost.

In a nutshell, it would take a concerted effort from all the players in the payment ecosystem to educate both merchants and end users about the economic cost that is associated with the cash usage and benefits of digital transaction. Spreading awareness of the availability and usage of electronic payment modes is essential, along with mitigating security concerns in order to get more people onto the digital payments bandwagon.

Please list out the elements crucial to successful implementation of your payment systems?

One of the biggest challenges faced by enterprises today is reconciliation to the actual payer post receipt of the payment which in some cases takes more than four days leading to an inventory cost. Improved visibility and reduced time to realize funds would enable them to take advantage of revenue generation opportunities. On the other hand, they would like to enhance customer experience by making it easier and more convenient for their consumers to pay.

Based on our long-standing expertise and experience in servicing both corporate (B2B) and retail (B2C) requirements in the area of payments; we have worked extensively towards understanding market trends and consumer expectations with regards to making payments. As a result we have come up with the following insights –

  • Reminders from Presentment to Payment: Switching channels causes friction, penalties and loss of entitlements;
  • The need to control and feel comfortable while using the payment mode;
  • Ability to pay on the move – convenience to make anytime, anywhere payments;
  • Less friction points needed to reduce time taken to make the payment; and
  • Security while effecting payments is paramount.

 

headder_01It is ironical that despite having about 400 million debit cards, 20 million credit cards and most savings accounts being e-enabled, people still use cards most of the time to withdraw cash from ATMs, which in turn increases the so-called ‘cash economy’

 

To fulfill the above consumer expectations and in turn enable enterprises to achieve their own business objectives, TechProcess Payment Services Limited brings its Integrated Product, Platform & Service Offerings to deliver industry-specific solutions to help enterprises operate efficiently and deliver differentiation in the marketplace. We have created cloud-based solutions which can be customised to meet the requirements of any organisation, be it from insurance to utilities, mutual funds to telecom companies and so on. Our solutions include:

Customer Center

The Customer Center platform enables efficient Corporate Financial Supply Chain Management (i.e. better management of receivables and payables). Through this platform, mandates for ECS, ACH, standing instructions on cards can be created. It also facilitates collection services for cheques and mandates, cheque truncation and post-dated cheque processing, transaction processing and settlement.

Bank Center

Just as Customer Center caters to enterprises, for banks we have an interesting platform called Bank Center that enables multi-modal clearing and settlement. It facilitates better treasury and fund sighting for banks and corporates.

FeesJunction

The education sector is a significant sector for payments services companies. We service education institutes with our next generation payment processing platform called FeesJunction which enables educational institutions to migrate their payments database from the existing spreadsheet format to a cloud-based platform accepting multi-modal payments. The design allows one to upload the course content and the respective fees on to the portal, enabling the institution to offer fee payment services online.

TechPro Enabler

We also serve the investor community with an exciting product called TechPro Enabler. We realised that end-investors are now increasingly tech-savvy and want the convenience of being able to transact and transfer funds online. Our platform enables financial distributors to offer online services to their clients through a cloud based platform.

How can technology and smartphones accelerate the growth of payment revolution in India?

For a payments services company, technology has always been seen as an enabler for delivering a seamless user experience and, hence, is imperative for us to harness our technological acumen and combine it with our industry specific knowledge in order to contribute to increased adoption of electronic payment modes through enhanced convenience.

It is a foregone conclusion that with over 900 million subscribers and nearly 200 million internet users (mostly through phones), the way forward is to provide effective payment solutions using the phone. However, we stress that phones are just a channel of payment, and what we need at the moment is an interoperable ubiquitous solution that does not tie you up to single operator, wallet or financial institution.

Phones will be used for payments in two broad ways: for essential ‘must-pay’ items like your electricity bill, prepaid recharge, phone bill, gas bill etc. This will be led by solutions which find mass acceptance using simple one-click solutions even on a feature phone.

Smartphones will power the new ‘app’ generation, where the payment mechanism needs to be embedded in the app, be it for shopping, insurance payments, travel booking or any other discretionary spend items. Again, here we need solutions which are not tied to a particular operator or financial institution, which is where we see exciting possibilities for aggregators like TechProcess.

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