Future of Digital Payments and its impact on industries

Future of Digital Payments and its impact on industries

The outbreak of Covid-19 has impacted countries all across the globe – socially, environmentally, and of course economically. Its spread is truly unprecedented and its repercussions are going to run deep as industries, businesses, and economies gear up for a ‘new normal’.

The outbreak of Covid-19 has impacted countries all across the globe – socially, environmentally, and of course economically. Its spread is truly unprecedented and its repercussions are going to run deep as industries, businesses, and economies gear up for a ‘new normal’. The coronavirus pandemic has also had a major impact on the payments industry. On one hand, consumers and businesses have to confront a scenario where they might need to drastically change their purchasing habits while on the other hand, the banking and payments industry has to straddle the dual requirements of providing access to cash in a safe manner and enabling secure digital transactions.

Contactless payments gaining currency
The current pandemic has driven people towards reducing physical contact or maintaining a certain distance. Even as the future remains uncertain, it is highly likely that ‘minimal contact’ modes of payment will gain currency as they become a key imperative of a robust payments infrastructure.

Banking & Financial Sector
For a while now, significant strides have been made towards providing individuals with end-to-end digital payments solutions that can holistically meet several needs of the consumer.

National Payments Corporation of India (NPCI), launched its one-stop fintech payment solution – UPI AutoPay in July that will enable recurring payments and can be used for multiple financial purposes such as utility payments, booking bus pass, train tickets, paying DTH subscriptions among others.

Similarly, ATMs are also going contactless with Card-less features like QR code and OTP based cash withdrawals. AGS Transact Technologies has introduced Touchless cash withdrawals on ATMs which enables a bank’s user to withdraw/deposit cash in ATM by scanning a QR code displayed on the ATM screen, using his/her smart phone. QR code transactions are faster and more a secured way of making transactions on ATM as the chances of card-skimming are mitigated.

Retail Sector and MSMEs
According to a survey by merchant digital payments solution company India Transact Services Limited, 57 percent of respondents used digital payments 5-6 times a week while 21 percent of them claimed to use it thrice. It further added that among the different modes of digital payments available to the consumers -UPI/BHIM, Tap & Pay on PoS terminal via credit/debit, E-wallets, QR Code, Payment Gateway, SMS Based Payments and Prepaid Cards were found to be most popular.

QR code has been growing rapidly and one of the biggest factors contributing to its growing popularity, other than its contactless nature, is interoperability. They can be used at a regular kirana store as conveniently as they are used at large retail outlets and on e-commerce platforms, as QR codes can be placed on any screen, any app and any surface on which they can be displayed or affixed to.

Another sector that is increasingly adopting digital and contactless modes of payments to respect social distancing norms is fuelling. In addition to popular digital payment apps, fuelling apps such as HP Fastlane by AGS are becoming increasingly popular among users. Fastlane allows its users to pre-set the amount by using his/her smart phone and fuelling is dispensed once the RFID reader scans the Fastlane tag pasted on vehicle’s windshield. Its end-to-end digital platform reinstates customers’ confidence in fuelling as it requires minimal human interaction thereby mitigating risks.

Mobility in India was already undergoing change and the pandemic has further accelerated it. With FASTag becoming mandatory and the social distancing being the norm, contactless mobility solutions will also see a surge in the days to come. Public transportation is one of the key factors to a growing economy.

Major Metro projects in the country using Automated Fare Collection Systems are already considering digital/paperless ticketing. Joining this league, to promote contactless ticketing and social distancing, the Mumbai Metropolitan Region Development Authority (MMRDA) has also invited bids for partners to develop and operate a common mobility application under its integrated ticketing services (ITS) project. This application will enable contactless and seamless travel across public transport systems.

A digital/contactless infrastructure is an outcome of robust and sustainable technologies. We see Near-field Communication Technology (NFC) & QR codes as the driving forces that will govern the transition from traditional to digital transactions. NFC is now being increasingly used in credit cards, smartphones and at PoS terminals to enable contactless payments in a secure environment.

QR codes can help create a contactless payment infrastructure, quickly, safely and in a cost-efficient manner. The interoperability of QR codes has opened infinite possibilities for businesses and industries ranging from payments to contactless fuelling and ticketing for bus or metro. According to a recent RBI report, Unified Payments Interface (UPI) currently caters to over 250 Mn transactions monthly through QR codes. To strengthen the popularity of QR, RBI has also set up a committee to incentivise the merchants using QR codes.

In addition to the above, innovation is fuelling the possibilities of wearable contactless payment technology where a vast range of wearable devices including wristbands, watches, fitness trackers, and even jewellery, can enable contactless payments.

Technologies like tokenisation of debit, credit and prepaid card transactions will not only facilitate contactless payments but will also enhance the security of digital payments.

So, while we expect the use of technologies like ‘Contactless Payments’ to drive businesses across sectors, we believe that the Indian Economy will sustain the harmonious coexistence of both – Cash & Digital. Some processes may go digital or the way customers access/withdraw cash might turn contactless, but the coexistence of both shall persist in the future as well.

For feedback, write to marketing@agsindia.com

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