Asset-lite technology to be a game changer for digital payments in India

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The year 2019 has been ‘talk of the town’ for a lot of reasons. But for India, it has been a year of payment system evolution. Factors like affordable internet, smartphones, and regulatory support from the government have made the country cash-lite to a great extent. A large part of this adoption is driven by Fintech companies for innovative technologies and banks for customer-friendly solutions.

Worldline India, owned by Worldline SA, a leading payments company of Europe, has released an annual report on India’s Digital Payments. This report analyses the landscape of digital payments in India, the technologies performing favourably, and potential developments in digital payments.

UPI: The clear winner

In the past decade, Indian consumers have shifted gradually from ‘in-line’ to ‘online’ payments. The adoption ratio of payment methods like credit/debit card, Immediate Payment Services (IMPS), and Unified Payments Interface (UPI) has seen quite a surge in 2019. Based on the data from RBI (Reserve Bank of India) and NPCI (National Payments Corporation of India), “the combined payments volume of these four payment products reached 20 trillion last year. While the combined value recorded was ₹54 trillion.”

The report suggests that while IMPS brought the most value in 2019, UPI was the most preferred payment mode in terms of volume. Credit and debit card transaction value remained steady throughout the year. This vast difference between the payment modes suggests that digital payment has performed well in Person-to-Person (P2P) transactions rather than the Person-to-Merchant (P2M) ones.

In 2019, India’s UPI became the fastest product to achieve a volume of 1 billion transactions per month. The recorded worth of UPI transactions in 2019 was ₹18.36 trillion, 214% more than the value in 2018. The report also highlights that Bengaluru recorded the highest number of digital transactions in 2019, while Maharashtra had a lead amongst ten states with the highest digital transactions.

Vision 2020

Currently, P2M digital transactions mostly rely on POS terminal or QR code. However, Sunit Rangola, Vice-President -Strategy, Innovation and Analytics at Worldline predicts that physical merchant payments are about to witness a game-changer in 2020 with asset-lite technologies in merchant acquiring”.

Asset-lite technology means that merchants will be able to accept QR or card-based payments through the app on their mobile phones. Near Field Communication (NFC) enabled cards will only require a tap-on-phone. Merchant payment through SMS or WhatsApp links will allow the buyers to pay via internet payment gateways.

This likeliness of asset-lite technology’s success is based on factors like reduced cost with NFC enabled cheaper smartphones, multiple revenues from value-added services on the mobile app, and convenience of managing bills and accounts on a single platform.

Deepak Chandnani, Managing Director, Worldline South Asia and the Middle East predict, “We can now anticipate that these retail payment products will collectively reduce cash dependency to a great extent provided there is an impetus to set up multiple acquiring touchpoints in the country.”

Asset-lite technologies have the potential to change the face of digital payments in 2020, the report concludes.