BackContactless payment methods will be on the rise
The RBI and the government have to encourage healthy competition and ensure innovation is not curtailed at any cost
PremiumContactless, mobile and a retreat from cash are just the start, as the payments industry will undergo rapid changes and winners in the future payments ecosystem will be those that make the right decisions today, said experts as part of the webinar series “Future of Payments".
The panellists Praveena Rai, Chief Operating Officer, NPCI (National Payments Corporation of India), Shuvi Shrivastava- Vice President, Lightspeed Venture Partners and Reeju Datta, Cofounder, Cashfree examine the past and current trends in the payments industry and how it is being re-imagined across the board. Edited excerpts below:
How does one become anti-fragile during these times - meaning grow through change and challenge? What will define leadership in the payments industry?
Praveena Rai: Proper breadth and depth analysis of the entire corpus of safe payment is imperative. Digital onboarding, digital purchase, the entire digital experience that we offer the customers define the future of payments. Also challenges addressing disputes, services, complaints in an end-to-end manner needs to be looked into. Relentless innovation is the keyword.
As a practitioner, how are you looking at some of the trends of aligning customer feedback with the product to define innovation with specific examples?
Reeju Datta: Offline to online movements have escalated substantially. Some specific examples would be lending, education, financial services in general, all kinds of agent-based payments. From a payment aggregator perspective, we need to build specific solutions for these industries which might have different kinds of core payment requirements. We should focus on working around the reconciliation of payments, refunds, accounting, recurring credit payments.
What are the different hot spots that you see emerging in the overall fintech space? Is fintech losing sheen?
Shuvi Shrivastava: The rise of long-tail and small merchants is retelling the India credit story. Another regulatory approval that I recently observed was the credit link to UPI which essentially opens up credit to more people. Lending is an operative word now. But even great financers with huge credit risk experience have not been able to scale it as easily in India as it has been the vision. If we look at balance sheet lenders in our country, the leverage ratios have been so low. With the moratorium in place and a downhill situation at present without a proper strategy, it would be difficult to negotiate with the lending space.
In the context of change in the payment landscape, are we going to witness a rise of monopolies and duopolies and how is it going to impact this industry at large?
Praveen Rai: The natural cycle of innovation and domination will continue as ever. The big players will bring their own strengths and redefine the market. But there will also be space for new players with ample opportunity for growth. The power of ideas should never be undervalued because it creates a level playing field for all.
Reeju Datta: The market is quite vast and the target market is probably slightly different from what payment aggregators like us go for. A one-size-fits-all approach does not work in this highly fluid environment.
Shuvi Shrivastava: Payments is one industry where there are no losers. Multiple generation companies are doing good; simultaneously we need to look out for the start-ups as well who are carving a niche segment. Figuring out the right niche and building new products is important. It’s not just about payments but the software around it as well.
Reeju, finally, as a Y-Combinator startup who has built the business ground-up, what do you think are the key trends that will define the future of the payments industry?
Reeju Datta: Supportive policymaking is definitely important. We have an ongoing wave of digitization of payments and financial services catalyzed by the pandemic. The RBI and the government have to encourage healthy competition and ensure innovation is not curtailed at any cost. They have to be receptive to the feedback shared by the payment industry. Then there is security and privacy that needs attention. With faster, convenient payments, we are seeing new kinds of fraud. We, payment companies, will need to use technology, adhere to the best practices, and build consumer awareness to upgrade ourselves.
In terms of product trends, we can expect the proliferation of many kinds of contactless payment methods, credit cards and their usage getting reinvented, easing of cross-border payments and payment companies diversifying into related but non-payment banking functions.
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