Emerging Payment Techniques

Presented By:Mitul Jain 10030241183

Objective• To study and analyze the current as well as futuristic payment

techniques across the globe for the benefits and risks associated with them

• To come up with the best alternative with its future scope in the payment industry

Indian economy has shown strong growth in recent years, making it a USD 1.3 Trillion economy

Expected to grow at a rate of 8.9%

Cash continues to be the only mode of transactions for the 40% unbanked population in the country

33%

67%

Payments

Electronic Cash

24%

34%

33%

9%

Electronic Payments

Debit CardsECSCredit CardsFunds Transfer

Problems in Cash Economy

• Counterfeit currency is used to fund illegal activities, and adds to the ‘black’ money circulating in the economy

Fraud

• Number of notes in circulation in the Indian economy is about 49 billion, increasing at a rate of about 10% per year

Cost to Economy

• Inconvenient and carries the risk of being stolen

Inconvenience of carrying cash

• Providing the exact amount of change in any transaction is inconvenient for the consumer and the merchant

Tendering exact amount of cash

Lack of Secure Authentication

Manual Administrative

Process

Use of Cash as a Payment

instrument

Poor Accessibility to Banks/Post Offices

Payment Inefficiency

The Indian Credit Card Market

Credit card market in India is about 3 million with a value turnover of around Rs.2500 crores

Potential market of 60 million cardholders

The credit card business is a low-margin, high volume business

Utility payment is another segment where more payments are being made through plastic money since the last two years

The Indian culture doesn’t promote credit, and it is this outlook change which is the most important development for the credit card industry

Issues in Credit/Debit Payments

Hidden Cost

Limited Usage

Privacy and Security Concerns

Mobile Payments

All the current non-cash payment modes viz. credit cards, debit cards, multiple mobile payment solutions, appeal to only a small section of the ecosystem

Various modes of mobile wallets such as prepaid, direct debit, as well as postpaid exist in the market today

Recent amendments to RBI guidelines have allowed non-banks to issue mobile based semi-closed instruments, while also extending their usage to bill payments and ticketing

Mobile Penetration Reaching 97%

2010 2011 2012E 2013E 2014E 2015E0

200

400

600

800

1000

1200

1400

Mobile Penetration

Mobile PenetrationExponential (Mobile Penetration)

A combination of nearly 100% mobile penetration in India and spiraling mobile customer base makes mobile phones the perfect medium to enable non-cash retail transactions in India.

NFC Payments

Benefits of NFC payments

InteractivityRemote Multi

Application Management

Remote User Management

Evolution from the “issuer-centric” model to the “user-centric” model

Biometric Payments- Pay By Touch

Allows the consumer to pay with the touch of a finger on a fingerprint scanner linked to a payment file

The fingerprint template is typically linked to a router and transmission media necessary to clear the transaction through an automated clearinghouse

Biometric payment providers may also link captured transactions to loyalty reward programs, gift cards, discount coupons and Web access services

Benefits of Biometric Payments

Rapid Transactions Reduced Fee

Uniqueness

Key Findings

Incumbent led Innovation

Disintermediation and new paradigm

Current leaders defend the fort

New balance of power

Rapid Technological Innovation

Moderate Technological

Innovation

High Competitive

Intensity

Low Competitive

Intensity

Competitive intensity and technological innovation will shape the future of payments

Usage Pattern of Consumers

Small Ticket Item

Electronics DVD/Videos Video Games Books Clothes Grocery

18

13 1412 13

119

36

25 25 24 23 22

17

Basic Phone Smartphone

Challenges Faced

Security

Technology/Adoption

Privacy

Regulation

Cost

Reliability

Complexity

Availability

Other

71%

57%

38%

33%

32%

29%

26%

21%

6%

Success Attributes

Convenience/Accessibility

Simplicity

Security

Speed

Low Cost

User Experience

Availability

Brand Trust

Control

Scalability

Regulation

Other

81%

73%

57%

43%

43%

40%

34%

28%

24%

19%

11%

3%

The Future of Payments

NFC Biometric

Futuristic Payment

Watch the space !!!

References• Mobile Payments in India- A new frontier , www.deloite.com• www.nfcforum.com• RBI: Report of the HighLevel Group on Systems and

Procedures for Currency Distribution, 2009• 2011 Online Payment Poll• TRAI Annual Survey 2011• Raconteur: Future of Payments• http://www.nfcnews.com• http://techbiometric.com

Thank You