The path to ubiquitous e-payments Prateek Roongtapicupfintech.in/ppt/8.pdf · The path to...

Digital Payments_Prateek Roongta_Final.pptx 0

ON TAP, CASHLESS, AND CONTACTLESS The path to ubiquitous e-payments

Prateek Roongta Partner and Director, BCG

1st March 2017


Payments in India have evolved rapidly

The payments space has witnessed large scale disruption

• Digital at the heart and centre – innovative, mobile based solutions

being deployed

• Entry of non-banks as payments service providers – threatens

disintermediation of banks

Consumer needs and expectations are evolving rapidly

Banks are responding rapidly in order to retain their customers and balances

• Guided by the experience offered by e-commerce players like Amazon

and Uber

• Increasing mobile and internet penetration provides further impetus

• Thinking like "non-banks" to deliver cutting-edge payments

experience


Bank led

Telco

led

Prepaid /

Wallet

Payment

banks

Ecomm /

tech

2012 and before 2013 2014 2015 / 2016

Source: BCG research

Winners not yet decided – there is whitespace but it is being taken fast

Entry of several new players

Movida Partners

and HDFC Bank

Pockets by ICICI

Bank

KayPay by Kotak

Mahindra

Ping Pay by Axis

Bank

SBI

Buddy

PayZapp

Lime by

Axis Bank

Pockets by ICICI

Bank

Ziggit by IDFC

Bank

Vodafone –

m-pesa

Airtel

Aditya

Birla

Paytm

India Post

FINO PayTech

Reliance

Vodafone –

m-pesa

Airtel

money

Idea MyCash mRUPEE by

Tata

Mobile

Money

BookMyShow

Flipkart Wallet

freecharge

MOWA

Chillr

Snapdeal iKaaz

freecharge

PRIZM

Ola Money

Momoe

Ezetap

MobiSwipe

Mswipe

Paytm

MobiKwik

ezeClick Oxigen PayMate

MoneyOnMobile ItzCash OxiCash

Simpel

YPAYCASH

PayUmoney

QwikCilver

QuikWallet


Digital payments gaining traction

639

389

172

9553

0

200

400

600

800

1,000

Number of transactions (million)

+86%

2016-20171 2015-16 2014-15 2013-14 2012-13

814

604

255

108

33

0

200

400

600

800

1,000

Number of transactions (million)

+123%

2016-171 2015-16 2014-15 2013-14 2012-13

Mobile Banking Mobile Wallets

Value

INR billion 60 224 1,035 10 29 82

2,367 6,022 306 270 321 INR / Txn

206

341

4,040

10,375

8,704

13,631

307

377 1,124

Note: 1. 9months data is taken for 2016-17 Source: RBI; Payment System Indicators.


Customers exploring digital payments beyond mobile recharge

22

29313136

5155

66

1620

28

1814

29

22

73

0

80

60

40

20

% respondents

Other

services

In store

(POS)

Fund

transfer

Travel

booking

Ecommerce Other

utility bills

Mobile bill

payment

Use cases

Prepaid

mobile

recharge

Non metro users Metro Users

POS payment and usage for other services low

Bill payment second largest use case

Prepaid recharge still the largest use case across metro and non metros

Source: Google-BCG market study based on Nielsen consumer survey Question: For what all purposes have you ever used a digital payments instrument?


Convenience, not only offers, drive stickiness of customers to mobile payments

Co

nve

nie

nce

O

ffe

rs

Metros Non- Metros

66% 51%

48% 57%

Source: Google-BCG market study based on Nielsen consumer survey Question: Please select your reasons for using digital payments


Customers open to using digital at physical POS

48

49

52

61

66

71

73

40 60 80 20 0 %

Unorganized retail

Travel and transport

Professional services

Utility bills

E-commerce

Organized retail

Food and entertainment

Large format POS use cases

Source: Google-BCG market study based on Nielsen consumer survey Question: Please tell us for which regular payments are you most likely to use digital payments instruments


Merchants open to accepting digital payment

3 out of 4 merchants think digital will grow big and aid sales

41%45%

58%

84%

Agree that

convenience is the

largest reason for

continued usage

Value the avoidance

of this struggle for

change

Value not having to

store and manage

cash

Find it a convenient

way to account and

track transactions

Source: Google-BCG market study based on Nielsen consumer survey Question: Please select the reasons that apply to you for businessmen started accepting digital payments


Merchant ACCEPTANCE will grow 10x

Organised Retail

10 Mn+ Merchants

1 Mn

Newspaper Vendor TV cable supplier

Coffee Shops Cycle Rickshaw

"Mom and Pop" Kirana Milk Man


UPI and India Stack could be potential game changers

IND

IA S

TA

CK

Open Personal Data Store

CONSENT LAYER Permission "on demand"

IMPS, UPI, APB and AEPS

CASHLESS LAYER Financial tx "on demand"

e-KYC, e-sign, Digital Locker

PAPERLESS LAYER Documents "on demand"

Open access to biometric identification

PRESENCE-LESS LAYER Authentication "on demand"

Source: India Stack website, ispirt presentation, https://medium.com/wharton-fintech/the-bedrock-of-a-digital-india-3e96240b3718#.h0a1hgcp2


We expect cashless tractions to overtake cash transactions in the next 5 years

2005 2010 2015 2020e 2025e

89%

11%

5%

78%

22%

13%

60%

42%

26%

41%

59%

39%

In 5 years DIGITAL

will be as large as CASH

Cash

Non-cash

Digital

92%

8%

1%

Note: Digital includes electronic payments, ACH, mobile based payments etc. Digital is a subset of "Non-cash" Source: BCG analysis

2022e


Key questions for consideration of the panel What would drive large scale adoption of digital payment instruments?

What could be potential barriers for adoption?

What role can banks play in driving adoption of digital payments?

Can UPI really be a game changer? How to make it happen?

How can Fintechs collaborate with banks and FI to proliferate adoption?

How would digital payments providers build a sustainable business model?

What is expected from regulators / government to turbocharge adoption?


Thank you

bcg.com | bcgperspectives.com

The path to ubiquitous e-payments Prateek Roongtapicupfintech.in/ppt/8.pdf · The path to...

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