Payment systems in India: Understanding the policies and innovations [#IRE 2014]

For many years, credit/debit cards have remained the most common form of electronic payments in India. But off late this trend is slowly changing. New technologies such as cloud computing, mobile telephony and growing popularity of virtual currencies are bringing significant changes in the way payments are processed in the country.

According to a report released by ASSOCHAM and Deloitte, critical factors viz. mass reach, security, service provider agnostic, ease and convenience of operation, leverage on existing infrastructure and competitive pricing are the most critical factors for the success of mobile payments in India.

At iamWire’s Internet Retail Expo 2014, experts from EMVANTAGE, AmEx, etc. gathered together to held an interactive session for understanding the policies and innovations in the current payment systems in India and the challenges ahead.

The panel included Pranav Barthwal, VP, GM-Global Merchant & Partner Card Services, American Express, Jitendra Gupta, Founder, Citruspay and Vivek Sagar, CEO, EMVANTAGE.

“The revolution has come in the Ecommerce industry. After the first few online payment transactions the customer feels more comfortable to pay online,” stated Jitendra at the beginning of the session.

Pranav, on the other hand, believes that although we have came a long way in terms of payment gateway transformation. However, still payment as well as Ecommerce companies have not been able to give that confidence to consumers to pay online.”

Talking about the popular payment mechanisms, Jitendra said, “COD is still the preferred medium as there is lack of trust in consumers for online payments. But I believe that RBI is doing a great job in building trust in the market. Payment companies would not have even existed if RBI has not taken steps to reduce frauds.”

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“From a merchant perspective only 50% of interactions reach a payment stage and out of that, only 70% finally converts to the online buying. What has to be done to increase the success rate?” asked Vivek to the panel.

To this Pranav replied that merchants who fall in instant buying category such as booking tickets, can reduce the payment page dropouts to a minimum of 10% by reducing the amount of detail asked to as less as the username.

“Real problem is that customer is changing his mind. Optimizing the payment process and making it easier for the customer is the answer. It has to be done by being innovative on the payment page to make sure UI is easy for the customer,” said Pranav.

Vivek further added to the discussion that the failure or incomplete payment, is not because of the system, it has more to do with poor bandwidth. “We are moving at a slow speed, but we are innovating,” said Vivek, “It is time for the payment industry to come up with a mobile strategy.”

Taking a stake on the growth in mobile payments in India, Jitendra said, “A year back only 2% for mobile browsers. Now, it is around 15% for mobile browsers. In the last year, success rate of mobile payments has gone up from 20% to 67% in the last year.”

“The current payment methods are only the tip of the iceberg, plenty of works needs to be done. The reason people are comfortable shopping on one site and not on the other is because there experience is either good or bad. So the aim should be to optimize user experience,” said Pranav.

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Vivek concluded the session by saying that it is best to have your own arrangements and partnerships as you cannot afford goof-ups in payments.

For an overview of the social media discussions around this session, see this Storify. You can also watch this three-minute trailer or the full video.