Bank Cards and E-payments

April 10, 2023

Agenda

Background

e-Payment Initiatives

In Conclusion

Benefits and Key Focus Areas

Agenda

Background

e-Payment Initiatives

In Conclusion

Benefits and Key Focus Areas

E-Payments

Covers large canvas

Can change the way we shop, pay bills, travel, conduct business, bank and live

E-Payments

Development Drives GrowthP

erce

nta

ge

of

Ow

ner

ship

Per

cen

tag

e o

f O

wn

ersh

ip

100100

8080

6060

4040

2020

00

ElectricityElectricity(1873)(1873)

TelephoneTelephone(1876)(1876)

AutomobileAutomobile(1886)(1886)

TelevisionTelevision(1926)(1926)

RadioRadio(1905)(1905)

VCRVCR(1952)(1952)

MicrowaveMicrowave(1953)(1953)

1001008080606040402020 120120

Years Since IntroductionYears Since Introduction

PCPC(1975) (1975)

InternetInternet(1975)(1975)Cell PhoneCell Phone

(1983) (1983)

Source-- Microsoft

Explosive growth of e-commerce

The explosive growth of e-payment is driven The explosive growth of e-payment is driven on the sound platform offered by e-payment on the sound platform offered by e-payment technologiestechnologies …!…!

eCommerce – Few examples

Fund Transfers Bill Payments Ticketing &

Reservation Prepaid card Top-

ups Broking Auctions Gaming

Live happenings across World !!

Shopping

Ticketing

Bill Payments

Fund Transfers

Mobile Top-up

And more ...

mCommerce

Transaction brokers/ Payment Enablers

Act as “mBusiness store front” ( e.g.: mShopping)

Role of Infomediaries Proof Of Purchase

Mobile Airline Ticketing

Mobile Shopping

Mobile Stock Trading

Mobile Movie ticketing

Third party Mobile Service Providers/Mobile Operators/Service Aggregators

Banks/ Credit card Companies

From payments to e-payments

Source: Using the mobile device to identify and pay for services; Jason Andersson; Ericsson AB;2002 April

India : Increased Usage of e-Channels @ ICICI Bank

Share of transactions

in March 2000

Channel

2%Internet

3%ATMs

94%Branches

Share of transactions in September

2005

15%

40%

30%

Call centre & mobile 15%1%

However..

India remains an overwhelming cash based economy

More than 90% PCE made with cash

Agenda

Background

e-Payment Initiatives

In Conclusion

Benefits and Key Focus Areas

Cards

Drivers of migrating payments through cards

Spend on cards in India is only about 1% of PCE

Number of cards has increased from 7 Mn in 2000 to 44 Mn in 2004 (CAGR 55%)

Usage up from 2 Bn USD in 2000 to 22 Bn USD in 2004

Drivers of migrating payments through cards

Innovative Product Propositionbacked by Operations & Service

ExcellenceDrivers

Innovative Product Proposition

Co-branded proposition to drive Loyalty and Incentive to use

Co-Branded Cards

Example

ICICI Bank HPCL Credit Card The largest VISA co-brand in

AsiaConstitutes a growing

proportion of total card issues - 42% in ’04 to 45% in ’05

Fuel spends 2.5 times more than spends on regular cards

Innovative Product PropositionTravel CardWider acceptability and greater

securityMultiple currencies and

denominationsSpends on Travel Cards increasing

steadily

Travel Card

Spends on Travel Card is Increasing

0%

20%

40%

60%

80%

100%

FY'04 FY'05 FY'06

Travel Cards

Travellers Cheques

FY'04 FY'05 FY'06Travellers Cheques 1 1.15 1.25Travel Cards 0.02 0.1 0.25Total 1.02 1.25 1.5

Organised Market Estimate for Outbound Remittance from India ($ Bn)

Source Amex and VISA Estimates

Debit Card Volume and Spends – Asia Pacific

Debit Cards

Can revolutionalize electronic payments in India

Can be a major catalyst in changing consumer behaviour

70 % of cards in India today are Debit Cards

Usage is widening

Debit Cards

Debit Cards Performance @ICICI Bank

Increasing spends on

Debit Cards

Increasing penetration of

Debit Cards

Cards in Force (number in Mn)

0

1

2

3

4

5

6

7

8

Mar-03 Mar-04 Mar-05 Sep-05

Total Spends on Debit Cards increased more than 4.5 times over last two years

Spends per Debit Card increased 43% over last two years

Emerging Trends in Debit Cards Business

Segmentation and service Mechant rewards and loyalty

programsRelationship management

New innovations in technology e.g. wireless POS

New payment forms e.g. contactless, through mobile phones

Emerging Trends

Remittances/ Money Transfer

Card to Card Money Transfer

Cards can provide cost effective channel for remittance

Value can be loaded from bank account of sender to card of receiver

Improves efficiency and accessibility

Card based remittance

REMITTER BENEFICIARY PRODUCT

Internet

Credit /Debit Card

Card settlement system

Prepaid / Debit/ Credit

Card

Card to Card Transfer

ATM

Cash

Visa Money Transfer - Performance

SME Business

SME Business

Use of electronic channels will Increase efficiency Track expenditureImprove productivity

SME Business

Innovative Product Proposition

Credit resides on cardAbility to break up limits into

constituent partsConvenience – cash-less transactions,

multi-application, single cheque repayment

Loyalty – attractive rewards pointsComplete MIS to users

Benefits

Cashless transaction and credit facilities for closed user group environment

Fleet Card

Innovative Product Proposition

Pre-paid and credit versions Partnership with leading oil

companiesWorking capital requirements of

transporters (goods available at oil company outlets)

To be extended for multi-applications i.e. toll, spare parts etc.

656812 DriveTrack fleet cards already issued and in use

ICICI Bank Fleet Cards

Rural / Agri Business

Rural and Agricultural Economy

Technology and electronic payment systems can be the key drivers to help us reach out to the rural / agri population through cost effective modes of delivery

Rural and Agri Business

Innovative Product Proposition

Low cost payment mode for use in Rural / Agri economy

Farmer Card

Easy access to credit – enhanced reach through low-cost ATMs & merchant outlets

Faster updation & access to repayments – electronic transactions

Reduced financing cost – amount utilized when needed

Removal of cheque & consequent delays

Benefits

Innovative Product PropositionLoans to farmers for agricultural use

(including inputs )Limit resides on cardUsage

Cash withdrawal from ICICI bank ATMs

POS usage through ICICI Bank POS only

Other services through local bank branches

Eg. Loans to tobacco farmers, sugarcane farmers etc

Top rural ATM currently handles approx. 350 transactions/day

ICICI Bank Kisan Card

Government Sector

Government Sector – A big potential

Procurement/ PurchaseTax Collection (Filing of returns on

the net)Distribution of pension on cardsGovernment bills (e-governance)

Government Sector

Government Sector – A big potential

Will make government transactions more transparent

Will reduce administrative paperwork

Government Sector

Internet

Evolution of Internet Banking

Access to Basic Account

Information

Transfer from one account to

another for same customer within the Bank

Transfer to other accounts across

the Bank

Transfer to other customer accounts with

the Bank

Other Value Added

transactions like Bill Pay, Online Bancassurance

ICICIBank.com

Online Demand DraftMoney Order OnlineSeamless BillpayPure Gold OnlineBureau De ChangeMutual Funds OnlineOutward RemittanceBancassurance Integration

Various Services Offered

ICICIBank.com

Monthly Users: 6 lakhs

Monthly fund transfers : 5 lakhs

Monthly Bill payments : 2.33 lakhs

Users and transaction

s

Railway Online ticketing – 0.3 Mn tickets online to 3 Mn tickets in 2006

Mobile

Evolution of Mobile Banking

To Pull services

ICICI Bank Offerings Account Balance Inquiry Last 3 transactions Cheque Status Inquiry Stop Cheque Request. Cheque Book Request Bill payments Payment due date Reward points for redemption Demat balance enquiry Transaction status Bill Details

From Push Services

ICICI Bank Offerings Account Debit/Credit - When bank

A/c is debited by Rs.5000/- or more,as specified by customer

Cheque Bounce intimation Balance above/ below Limit

specified by customer Credit card payment due date

reminder Approaching credit limit

intimation Demat account credited/debited Instruction rejection intimation

Mobile Top-up

Allows card holders to top up mobile airtime using Credit / Debit card

Potential applications:

Airline and Railway tickets

Bill payments

mChq

The first mobile-to-mobile payment option between customers & retailers

A mobile will now serve as a Secure Point of Sale (POS) terminal and payment mechanism

Simple and fully secure transaction since every transaction is pre-approved by the cardholder and digitally signed for, through a PIN number

Visa Wave

Visa Chip Card

Just 1 account for contact chip, contact less and magnetic stripe technology

Launched in Malaysia, Korea, Taiwan

For use in supermarkets, convenient stores, mega malls, quick-service restaurants

Agenda

Background

e-Payment Initiatives

In Conclusion

Benefits and Key Focus Areas

Benefits

ConvenienceLower transaction costsIncreased operational efficiencyCan help reduce the size of

informal economy

Benefits

Key Focus Areas

Need to focus on security and transaction authentication for various channels

Payer authentication – “Verified by VISA” and “ MasterCard SecureCode” programs to increase payment security

CV2/CVC2 (CVD) Verification to confirm genuineness of cards and legitimacy of account numbers

Dual authentication for Internet Banking

Security and transaction authenticati

on

Key Focus Areas

Customer education on benefits and security requirements like password protection etc of each e-payment channel

Increased penetration of the channels and devices like mobile phone, Internet, POS etc for increased acceptability and usage

Customer education

and channel penetration

Agenda

Background

e-Payment Initiatives

In Conclusion

Benefits and Key Focus Areas

In ConclusionVarious new channels for e-

payments today to complement traditional channels

Penetration of e-channels has increased substantially

New technology initiatives and platforms provides the ability to drive newer payment channels

Customer today is more responsive to adopt newer channels

In Conclusion

In Conclusion

Total number of transactions through e-payments will increase expontentially

Need to continue focus on Security of various e-channels Customer Education Penetration of enabling

infrastructure to realise true potential of e-payment

In Conclusion

Thank You