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Ann Cairns of MasterCard talks about business opportunities and challenges in India
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As the president of international markets for MasterCard, Ann Cairns has a lot of experience in customer-related activities and of working with governments that have different parameters for financial inclusion. Edited excerpts from an interview in which she talks about business opportunities and challenges in India and the strategies that work here so that there are products for different kinds of customers.
How easy or difficult is it to do business in India compared with other Brics nations (Brazil, Russia, China and South Africa)?
India has some challenges because it is such a huge country. The population is divided into different strata of people whom you are trying to reach out to. So, there are challenges ranging from introducing high level products for the affluent to reaching a huge population through financial inclusion measures. It is like working across a whole continent because it is so diverse. It is also very interesting because all the states are at different stages of development. If I look at Brazil, which is the largest market for us outside North America, it is much more urbanized and has many more points of sale (PoS) terminals. The banking system is more consolidated and electronic payments are much more prevalent than in India. In South Africa, similarly, the system is more consolidated and 70% of the population is banked which is completely different from the scenario in India right now.
Different things across continents bring business challenges, which are, of course, very exciting opportunities for future growth.
What opportunities do the different strata in India provide?
We think of the business as covering a whole gamut of commerce. We are not restricting our thoughts to one area, or even to just payments. When you get up in the morning, you do not think of making a payment; you think of the activity—the actual payment is just a part of it and you want that to be seamless and safe.
We see ourselves as enabling that part to be easy. We think about what happens before and afterwards in terms integrating it the right way in the way people live their lives. It gives us an opportunity to design a range of solutions that match needs.
What do you think of the proposal by a central bank committee that chalks out a roadmap for mobile payments in India?
Mobile will be hugely important here in India because of the vastness of spaces and also because of the prevalence of mobile phones across the population. The big problem that you need to solve when you are doing things with mobile payment is not about me paying you through mobile (phone), rather it is about how to get cash in to start with and how to get cash out when you need it. For a long time, there is going to be co-existence of mobile, plastic and cash. So, cash-in and cash-out is really going to be important. In South Africa, the government loads benefits card for beneficiaries because they had gone for a card solution to begin with. But it can easily be mobile because anything you do on a mobile is chip-based and the chip can reside in a mobile.
The cash comes in from the government paying the benefits, so that solves one piece of the equation. For cash outflow, because it is a card in this case, you can get cash from an ATM (automated teller machine) or PoS machine.
Today, you cannot go up to an ATM or PoS with your mobile and get cash out. It’s a hardware problem of getting the cash out and that is why you do not go pure mobile in this space.
What we have seen on financial inclusion in the other parts of the world is that if you get a mobile and a card, you get flexibility. The card can be linked to the mobile and the stored value can be on both devices. But, of course, card gives you the option to use the existing hardware.
How viable is a cash-out option?
It is viable if you have the infrastructure. I have seen it work in Turkey. They have a system where we work with around half-a-dozen Turkish banks. This system allows you to go with your mobile to an ATM and get money out with the help of messaging. But the banks have to change ATMs to be able to do that. I am not saying it is a fantastically complex change but anything that involves changing hardware and getting banks, businesses and terminal providers to co-operate across an ecosystem is complicated because you have lots of stakeholders in the loop. In a place like India, you have a vast geography to cover, and in some respects, the level of infrastructure is not there. But you can leapfrog by putting in the latest machines and so on. So it is definitely possible. Maybe rather than waiting for all the infrastructure change, you can start doing what you can already do and just have a migration path.
So, giving cash-out options at, say, a grocery store, will work?
Yes. I think it is a great idea. In the Western world, I will go shopping and get cash back at the PoS. It is a nice and safe environment, and saves me from going to the bank or ATM.
The South African government is keen that shops be able to do that rather than people queuing up at ATMs. What they feel is that a shop is a safer environment where people know you near your home. Also, there are no ATMs in many of these places. You have to use what is there.
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