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While it is an acknowledged fact that India is primarily a cash society, electronic forms of payment are slowly but surely gaining a foothold in India. While there are real structural challenges in India with limited number of POS (Point of Sales) and ATMs (Automated Teller Machine), retail electronic payments are growing at a steady rate. The structural challenges in India severely constrain the existence of the 4 party payments model - Issuer bank, Acquirer bank, Consumer and participating retailer. Having said that, increase in number of ATMs and a concerted effort to increase merchant card acceptance points has positively influenced debit /credit card usage.

A convergence of forces is further creating tailwinds for retail electronic payments. While in other countries, some of these changes have occurred sequentially, India is experiencing these changes at the same time. Some of these changes are 1) Emergence of RuPay domestic network 2) Explosive growth in mobile coverage; 3) Regulatory clouds are clearing up; 4) UID and other enablers are coming online; 5) Government is using mandates in some cases to speed adoption.

While cash is expected to remain a dominant form of payment in the near to medium term, there are strong growth opportunities for players who innovate to overcome the structural challenges, effectively segment and target the customers, market their products with the right messaging to overcome the cultural and psychological barriers. With the RBI move towards EMV Cards (Chip and PIN based) , the fraud rate is expected to come down bringing down the psychological barriers in using cards as a payment mechanism.

Backed by deep market, regulatory and customer insights, Deloitte’s India Payments team has helped clients understand regulatory implications, innovate, develop go-to-market strategies, program manage large transformational projects and develop operating models. The payments practice in India works closely with Deloitte’s Global Payments practice to deliver global best practices and insights to our Indian clients.



  M-Banking & M-Payments: The Next Frontier: The Indian telecom industry has shown high growth in the mbile business, enrolling over 870 million1 subscribers, reaching not just urban, but almost 40% of rural India. This has enabled provision of communication, entertainment & information based services to the last mile without the need of in-person service delivery. Innovative mobile applications have offered an opportunity even to sectors other than telecom (e.g. M- governance, M-commerce, M-health) to solve challenges of reach, transparency and provision of good quality services at low costs.
  Mobile Payments in India: India is predominantly a cash economy, especially on the retail side, where over 65% of transactions are conducted in cash. This presents a huge potential for transitioning towards effective non-cash payment instruments. An innovative solution, which meets the requirements of the ecosystem players - consumers, merchants, banks, and has a mass appeal, has the capability to capture the large USD 410 billion retail market in India. Given the low penetration of bank accounts and the high penetration of mobile phones in India, mobile phones are an ideal mode for deploying effective non-cash payment solutions. However, the real potential of non-cash transactions can be unleashed only when key stakeholders involved in the development of the mobile payments ecosystem together take concerted steps in this direction. This report presents our view on the current scenario of non-cash payments in India and showcases how India is a fundamentally different market from most other developed and developing countries.



   Mobile eCommerce: India’s telcom sector is witnessing fierce competitive activity as telecom operators try to battle falling ARPU’s ( Average Revenue Per User) despite significant additions to subscriber base. Additionally, high prices paid for the 3G spectrum will pit increased pressure on telecom operators to monetize their network with high efficency. This report addresses the question “ Can the mobile operators seize the momentum and get ahead of the game? The answer is “yes”. However, they need to realize that the game of launching Mobile Value Added Services (MVAS) to generate incremental value is over. Thus, the telecom operators need to evaluate mobile eCommerce to help them monetize their assets and build a sustainable advantage, they need to look beyond the traditional defination of mobile eCommerce. They need to focus on building sustainable innovations by investing in strong two sided platforms to be at centre of the ecosystem. This “two sided model – commerce + payments” enables firms to build “network effects” between consumers and merchants through mediated commerce platform, which are valuable and merchants are willing to pay to be part of this ecosystem.


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