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digital payments


To incessantly state that mobile money has caught (and held) the imagination of the global payments space is unnecessary. Let’s just jump right in-GSMA’s 2015 State of the Industry Report: Mobile Money revealed that 271 mobile money services were available in 93 countries, as of December 2015. For the same period, 411 million registered mobile money accounts existed globally. To drive home the point further, the report stated that mobile money has done more to extend the reach of financial services in the last decade than traditional “bricks and mortar” banking has in the last century. Duly noted.

This phenomenal success wasn’t achieved overnight, obviously. Quite the contrary in fact-mobile money went through an interesting evolution before it even found a place under the payments sun, so to speak. Here’s how-in the early days, the biggest challenge before mobile money operators was getting their customers enthused about the product. Of course, getting them onboard was altogether a different ballgame. Since then, the ecosystem itself has undergone several permutations and combinations. Even now, the industry is going through a state of flux-what with the fast growing adoption of digital payments and the rising importance of “contextuality” and better user experience.

Equally fluid, then, are the challenges facing mobile money operators. Today, every operator who wants to stay in the game is focusing on minimizing customer churn and ensuring frequent and optimal service usage. So, this, in a nutshell, is where customer experience management (CXM) comes to the rescue.

Traditionally, ensuring consistency and ease of interaction are the first rules of any operator’s CXM handbook. It becomes trickier with services like mobile money-which have, hitherto, never been subject to the rules (or world) of CXM.

Which brings me to the crux of this blog-a multi-pronged CXM strategy for mobile money would do wonders for customer retention and service uptake. Easier said than done, of course, especially since there are no forerunners (none that hit home, at least) in this space. The need of the hour, therefore, is a tool or solution that would help operators leverage their mobile money services to the fullest-not to mention, fill the existing white space!

Permit me to add my two cents. In this case, a CXM tool or solution ought to be a one-stop shop for all things mobile money. It should ideally perform multiple functions that include (but obviously aren’t limited to) educating customers about the service, offering rewards “frills” to customers that stay put, enhancing engagement levels, growing the existing mobile money ecosystem, et all.

It doesn’t end there, of course. Analytics ought to function at the heart of the solution, which, needless to say, would help mobile money operators move several steps closer to what their customers really want.

In short, there is very little doubt that CXM (if leveraged properly) is poised to replicate its success in this space. But, what ought the first steps to achieving this be?

Watch this space for more.

February 23, 2017 0 comment
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Is cash set to abdicate its throne in India? It wouldn’t be an understatement, especially given the recent furore over demonetization in the country!

Without trying to sound too ironic, the government’s move to demonetize 500 and 1,000 rupee banknotes has, without a doubt, had profound and far-reaching implications. It is a courageous move (in my opinion, at least) towards tracing and eradicating black money and counterfeit currency. Having said that, however, let’s not forget that it is merely the tip of the iceberg.

How? Well, from our perspective, this development has had an interesting impact on the country’s digital payments space. Almost 86 per cent of India’s currency circulation was reduced to mere paper after November 8, 2016. Yet, digital wallets and financial technology companies laughed all the way to the bank. Naturally so, as customers turned their attention to digital payments almost immediately, thereby side-stepping the serpentine queues outside banks and automated teller machines. Here’s why this is significant-up until 2015, 78 per cent of all customer payments in the country were carried out via cash, as per a joint report by The Boston Consulting Group and Google India. Clearly, cash was the king in India!

Things have, needless to say, changed rather dramatically since then. Let’s take a closer look at the numbers to understand how. Shortly after the announcement, digital payments company, Paytm, registered over 7 million transactions worth Rs 1.20 billion a day. This propelled its gross merchandise value to over $5 billion. Of course, every digital payments company in the country left no stone unturned to leverage this opportunity to the fullest. And, they succeeded quite admirably, if the numbers are anything to go by. To cite another example, MobiKwik also witnessed a 200 per cent increase in downloads and added over 200,000 customers on a daily basis! That apart, the company is well on its way to on-boarding 1 million merchants in a span of 45 days. No small numbers, these!

As a brief side-note, I feel that it is pertinent to highlight the example of Akodara, a village situated 60 miles from Ahmedabad. What makes this example so special is the fact that it is India’s first digital and cashless village. Most of the 1,200-strong population there execute daily transactions-value notwithstanding-through digital payments.

Of course, the intent of this piece isn’t to wax eloquent on how these companies managed to set their cash registers ringing, in the aftermath of demonetization. Instead, the question is-is this a short-term surge or will the Indian consumer’s behaviour towards digital payments undergo a sea-change?

In my opinion, the latter statement is most likely true. Here’s why-the aforementioned joint report by Google and The Boston Consulting Group states that by 2020, the size of the digital payments industry in India will be $500 billion; contributing 15 per cent to India’s gross domestic product. By 2020, non-cash contribution in the consumer payments segment will double to 40 per cent and Indian consumers, are 90 per cent as likely, to use digital payments for both online and offline transactions. The drive to demonetize is more than likely to fuel this growth.

Meanwhile, another joint report authored by The Associated Chambers of Commerce of India and RNCOS, substantiates this statement. According to them, the mobile payment transaction volume in India is set to witness an over 90 per cent increase each year, over the next five years. The transaction volume is expected to have a compound annual growth rate of more than 90 per cent to reach 153 billion by 2022. Here’s the interesting bit-it has been valued at 3 billion this year. Quite a jump, this!

In short, the overall picture looks quite rosy, with a strong case for digital payments. Now, let’s break down the argument further. For India to become a “cashless economy” through and through, the argument must be examined from two aspects-the customer and the merchants, respectively.

For the former, a plethora of digital payment mediums are available today, apart from digital wallets. Broadly, these include (but aren’t limited to) bank cards, the Aadhar-enabled payment system and the Unified Payment Interface (UPI). Another interesting initiative is the Prime Minister’s Jan Dhan drive, which has boosted banking penetration in India. For a holistic picture, though, bank-backed wallets should be used to fill up the remaining gaps. These seem viable, given that they’re cost effective, easy to adopt and can be rolled-out rapidly for unbanked consumers.

Of these, in my opinion, UPI is likely to emerge as a game-changer in these times. Why? Well, in a nutshell, UPI is a payment infrastructure that permits mobile banking or wallet customers to transfer money to customers of any other bank and pay merchants. It also permits customers to receive mobile payments without disclosing the details of their bank accounts. In fact, it even addresses a very critical aspect-customer experience. UPI essentially ensures a seamless transaction and reduces the time taken for the same. This is because the customer is required to only enter a single identifier, i.e. a virtual payment address.

But, don’t take my word for it. In so far, 28 bank apps in the country have UPI facility. It garnered 175,000 active customers in just a week. Enough said.

Now for the merchant’s perspective. Traditionally, India has never been deemed as a point-of-sale (POS) friendly country. As per data released by the Reserve Bank of India, the number of online POS machines, as of August 2016, stood at 1,461,672. Quite dismal, especially given the kind of customer numbers one usually considers! Now, though, the situation is expected to change. Interestingly, as per news reports, merchants are now approaching banks to obtain POS machines. Not surprising, considering the kind of impact the demonetization drive would have had on their business! Permit me to cite an example from our own business-we witnessed an increase in the adoption of mobile POS, where our customers have reported a 500 per cent increase in order for POS devices. A small step, no doubt, but a solid one, nonetheless!

All in all, it looks likely that digital transactions will become the de-facto payment mode in India. Cashless times beckon, is India ready?

December 22, 2016 0 comment
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