Mr. Sunil Khosla is the Head Digital Business – Retail of Subsidiary, ITSL. He has been associated with ITSL since 2015. He holds a Post Graduate Diploma in Business Management from Apeejay School of Marketing, New Delhi, and the Advanced Program in Sales and Marketing Management from the National Institute of Sales. He has approximately 21 years of experience in sales and distribution. He has also been recognized as one of the Greatest Marketing Influencers in 2018 by CMO Asia. Mr. Khosla has been awarded the “Young Digital Person of the Year” award at the Digital Customer Experience Summit 2019 by Zendesk.
The Indian payment ecosystem has been in a state of constant evolution. While India continues to be a cash-intensive economy, various solutions such the Unified Payments Interface (UPI), National Electronic Toll Collection (NETC), Bharat Bill Payment System (BBPS), Aadhaar-enabled Payment Systems (AePs), etc., have accelerated digital adoption across the country. Additionally, various Government initiatives, regulatory policies, and changing business methodologies & consumer preferences have resulted in strong growth in the payments sector.
Further, the pandemic has enhanced the adoption of contactless or less-contact payment methods such as UPI, QR code-based payments, and AePS. While the pandemic has given a tremendous push to such modes, they are most likely to continue owing to the convenience they offer.
For instance, many retailers have installed PoS devices to accept digital modes of payments and are expected to also offer various Value-Added Services in times to come, for an enhanced customer experience. According to data published by Ken Research, there has been a significant rise in the adoption of PoS in India, growing at CAGR of 27.7% in the last five years. Further, small and medium merchants are now making attempts to enhance customer experience by offering flexible payment solutions with advanced payment options at POS terminals.
Trends that will shape the industry
The age-old PoS machine has been evolving significantly for years. New PoS terminals are android-based and also provide access to inventory and sales data which helps merchants in designing customized offerings such as loyalty/reward programs for their customers. Additionally, with the incorporation of technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), and Blockchain, merchants can analyze and predict customer behaviour. This will render a one-of-its-kind experience to the customer as these technologies can assist in providing recommendations based on calculative algorithms.
Value-Added Services at PoS
Today a payment terminal is more than just a payment acceptance point. POS machines are now equipped to provide a plethora of services. For instance, India Transact Services Limited, a wholly-owned subsidiary of AGSTTL, offers Integrated Payment Solutions to OMC merchants that allow instant cashless discounts, offered by the GoI for transactions realized at POS machines. This ensures that the benefit goes to the actual consumer and also allows seamless reconciliation for OMCs. Further, PoS terminals also offer bill payments and vehicle insurance renewal thereby increasing the value proposition for customers.
Such value-added services help customers enjoy an enhanced in-store experience.
Near-Field Communication (NFC)
With the help of NFC, credit cards and digital wallets on a smartphone or smartwatch can be used to complete purchases with just a tap on a screen. This is also being promoted by the Government of India, as the transaction limit was raised for contactless payments from ₹2000 to ₹5000, which will improve the convenience of digital payments even further in the future.
Additionally, POS terminals that support UPI speed up the billing process at retail outlets thus ensuring quicker checkouts. Contactless payments made through tap-and-pay, (which works on the NFC technology), dynamically generated PINs, and wearable devices, have made payments quick and easy and also added an additional layer of security.
Open System PPIs (cards)
With increased internet and smartphone penetration, India has witnessed tremendous growth in the e-commerce segment. From online shopping to buying groceries and essentials, the e-commerce vertical constitutes the major use of online prepaid cards. The surge in the prepaid card market is expected to increase significantly in the coming years, as more and more people adapt to the mechanism.
Enhanced by the number of private businesses offering meal cards as part of their employee benefits, the adoption of open-loop prepaid cards is expected to be at an all-time high. Such cards help customers with swifter modes of payments and negate the hassle of carrying a wad of cash.
Further, the flexibility of online payments through prepaid cards can help in seamless adoption across sectors by the means of payroll cards, loyalty cards, gift cards, etc.
Increased adoption of proactive cyber-security mechanisms
While there has been an increase in the adoption of digital modes, there has also been a surge in cyber-attacks. This is mainly due to the sudden shift to digital modes across sectors. With the growth in the digital payments space, there has been a significant rise in cyber-attacks. Hence, cyber-security will now become a vital part of the organizational structure and not remain merely a hygiene or compliance parameter. Additionally, tokenization is emerging as the new norm. Its goal is to prevent digital duplication of cards.
Tokenisation replaces the 16-digit card number with an untraceable token. In case of attempted data theft, the hacker cannot view any vital information as the actual payment information is stored securely by the payment partner. Recently, the Reserve Bank of India has extended the scope of tokenization to consumer devices – laptops, desktops, wearables (wristwatches and bands), and Internet of Things (IoT) devices.
These trends have the potential to lend end-customer a new, improved experience. The integration of payments, loyalty programs, data-centric offerings, and improved engagement initiatives will also increase the efficiency of the overall ecosystem. Additionally, few payment players have introduced analytics platforms/applications for their merchants. With a better understanding of customers and their purchase behaviours, merchants will be able to manage inventory better and ensure there is optimal stock in the store. With an omnichannel approach, most vital offerings will be integrated into the payment terminal elevating it from a payment acceptance point to an all-in-one solution.