M-payments beyond “just an interface”
Srinivas Nedungodi the Senior Vice President of Mahindra Comviva in a conversation with Sairaj Iyer, states that co-creation is required for making mobile payments compelling and look more than just an interface.
This interview was originally published in Banking Frontiers Magazine
Sairaj Iyer: What is needed to make mobile payments compelling?
Srinivas Nedungodi: Mobile is one of the most effective channels for payment services. The device plays a convergent role in managing various transactions on the go. Mobile payments services are constantly evolving and the concept of digital wallet or mobile wallets is the next stage of evolution. To accelerate growth of mobile payments, banks and telecom operators are entering into strategic partnerships with the former having considerable knowledge of these services and the latter having deep understanding of the distribution infrastructure. However, mobile payment is yet to attain its full potential and rise as a mainstream alternative to other forms of banking. Therefore, co-creation is imperative for banks and operators to work together to create a new market paradigm and ensure high level of consumer satisfaction.
What strategies can banks and retailers look to meet the objectives of a secure digital financial network?
In markets across the world today, mobile money has emerged as a viable alternative to meet the financial needs of the unbanked and the under-banked. Increasing penetration of mobile phones, combined with their ease of use, has enabled markets to evolve beyond basic financial inclusion to offer a full range of integrated services.
Here it is worthy to note, India’s digital finance segment experienced a boost with the introduction of innovative guidelines in 2014. RBI issued Payments Bank guidelines which allow companies with substantial distribution expertise- this includes mobile operators, retail chains and existing agent managers, to offer deposit accounts and payments as a stand-alone business. Such a regulatory move is expected to be a game-changer and pave way for expansion in digital financial inclusion in the next 2-3 years. For this to be successful, it also requires a compelling technological solution that allows such entities to fulfill security measures while at the same time deliver on bank-like financial services.
At Mahindra Comviva, we believe in providing an ecosystem which provides a secure experience to the end consumer. We have understood the complexity of mobile payments and simplified the process, for instance, few of the top mobile money deployments are powered by Mahindra Comviva. Mahindra Comviva’s award-winning mobiquity financial solution allows the role out of full range of banking and payment services across a wide range of devices and channels such as client apps, SMS, USSD, IVR, QR Codes and NFC enabling banks to successfully cater to the banking needs of various consumer segments. We are well positioned to perform as able partners to the new set of entities that will serve almost as banks for the greater cause of financial inclusion.
What can be done to make mobile payments look engaging than being ‘just an interface’?
The primary reason that banks play a vital role in the mobile payments ecosystem is because financial liability still rests with the bank. Operators, leveraging on their extensive distribution network, are working as business correspondents and thereby helping penetrate the reach of financial services to the masses. Banks need to bring efficiency in the system by putting the right building blocks to help in robust scale up of the services, which cannot happen overnight. There should be a compelling reason for the consumers to use mobile banking and that is what the industry should focus. To achieve the same, operators and banks have to come together and provide a secure ecosystem for the consumer.
What can be done to increase retail acceptance of mobile payments?
There are two different type of challenges and technological aspects to push the increase in the retail acceptance of mobile payments. To begin with, penetration of cards took a while in India owing to several factors. Banks and regulators have gone in the direction of debit cards today the number of debit cards in India is around 420 million. Suddenly, while most have a physical plastic card, what they really do with these cards is take out cash at an ATM to pay for goods and services. Truth is there are only 1 million merchant in India that accept cards hence cash is still a common form of payment for transactions.
Take the booming e-commerce market in India for instance. Unfortunately the culture is such that people still want to touch and feel products before making the payment. Cash on delivery is therefore still predominant in the country. E-commerce giants, insurance companies did not previously have a way of accepting anything but cash and the cost of installing and maintaining these POS terminals was expensive and complicated. So what players in the market found was that large and SMB merchants, need to have the ability to accept these card payments. That’s where mobility solutions came into play in the market, and we’ve seen a huge shift in how people are paying. In the next 2-3 years, we expect the 1 million merchants that accept cards to increase to 2.5-3 million driven by the mobile commerce market.
This is where we think we have an edge over those who only process or enable payments. Mahindra Comviva’s payPLUS solution fulfills the need for a quick and reliable user interface that supports and simplifies POS, billing and reconciliation-related activities. The solution also enables businesses to leverage location based services, to deliver promotional campaigns with offers and discounts to customers, based on their location / proximity from the business store.
Now, coming to the other aspect of merchants accepting card but not mobile based payments. There is emergence of contactless debit and credit card in India that uses near field communication (NFC) technology to make payments at the merchant outlets. From a futuristic perspective, introduction and acceptance of contactless cards in India will eventually pave way for greater adoption of mobile wallets or mobile based payments for consumers. On the merchant side, there will be the need to upgrade the POS machines to accept NFC payments through these contactless cards. Once the merchants have upgraded the POS terminals, we will see more entities launching NFC enabled payments through mobile wallets where the user will tap the phone to pay instead of a card to pay.
Crux of the matter, retailers need to move beyond traditional practices and adopt next generation technological solutions which would give them the required impetus to script greater success stories in the coming years. The next wave of growth is through technological innovation and it is imperative for the retailers to ride on it for greater success.
This interview was originally published in Banking Frontiers Magazine