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    PayTech 2023-24 IIMS

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    PayTech 2023-24 IIMS

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    13 views46 pages

    PayTech 2023-24 IIMS

    Uploaded by

    mayankggg09

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    © All Rights Reserved
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    Digital

    Payments /
    PayTech
    Dr. Neeraj Amarnani
    Financial Services Framework

    Payment Savings & Risk


    Credit
    Systems Investments Management

    Decision Support

    Infrastructure

    Legal framework
    Financial Services Framework - Payments

    Payment Savings & Risk


    Credit
    Systems Investments Management

    Decision Support

    Infrastructure

    Legal framework
    Money has three fundamental
    and complementary roles.
    • As a unit of account: a yardstick that
    eases comparison of prices across
    Essence of things that we buy and promises
    that we make.
    Money • A medium of exchange: that is
    universally acceptable
    • A store of value: enabling users to
    transfer purchasing power to the
    future.
    Use Cases of Money
    • Immediate payments:
    • Cash and Access to cash whenever needed – remember, ATMs weren’t always
    around. In fact first ATM introduced in 1967
    • Cards (Credit, much later Debit) – they weren’t always around either! 1950/’58
    • Online Payments
    • Purchase for goods and services online PayPal, AliPay, Paytm
    • International Transfers
    • Remittances SWIFT, Stripe, Wise, Payoneer
    • Physical Goods payments (not in cash)
    • Point of Sales Square (Block), Mobikwik
    • Mobile payments PayTM, Google Pay
    • P2P mPesa, Venmo, GPay, PhonePe, Paytm
    Currency
    Taxonomy
    Four-way Classification
    • Central Bank Issued / or
    privately circulated
    • Peer-to-peer or only for
    institutions / central bank
    • Electronic or Physical
    • Universally accessible or
    limited circulation
    Money Flower with eg.

    PokeCoins

    E-gold
    mPesa, CADcoin
    Venmo, PayTM

    Dinero Electronico, BerkShares,


    Bristol Pounds
    Fedcoin,
    DCEP, Sand Utility Settlement Coin
    Dollars, (Fnality)
    eNaira,
    Bitcoins
    eRupee
    Precious Metal Coins
    The Evolution of Modern
    Payment Systems
    Extract from Capgemini World Payments Reports, 2021 & 2022
    • PAYMENTS 2.0: Payments as a
    Differentiator : Kicked off about 15
    years ago by a few payment
    pioneers. Fast Pay became key
    differentiator

    • PAYMENTS 1.0: Payments as a


    Commodity : at this stage
    payments are a non-core service and
    packaged into a core banking
    concept; handled in-house

    The Initial Stages


    Source: Capgemini World Payments Report 2021
    The Contemporary
    Evolution
    • PAYMENTS 4.0: Payments as an Ecosystem Play
    : Firms offer Invisible Pay services, especially to
    customers in collaboration with
    Fintechs/Paytechs, other stakeholders.
    • Focus shifts from payments as a product to
    a tool for customer reach and engagement.
    • BigTechs have edge, build payments-related
    value-added services on top of their core
    assets (customers, technology, data and
    deep pockets)

    • PAYMENTS 3.0: Payments as Information :


    Data became king, facilitates Easy Pay. Banks
    invest in AI/ML, BDA, Data Lakes | Data
    becomes an asset to improve risk analysis,
    speed up credit decisions and anticipate
    customer needs. The advent of PSD2.
    Source: Capgemini World Payments Report 2021
    Payments Emerging Scenario:
    Payments 4.X: Embedded
    Payments

    • Firms extensively share infrastructure and


    data via platforms, leading to payments
    becoming embedded, invisible, and an
    enabling function in a collaborative
    environment to boost customer experience.
    • Payments costs go down as data
    digitalisation empowers banks to
    understand and service customers and
    manage risk.
    • Network effects become high-
    impact success factors.

    Source: Capgemini World Payments Report 2021


    Payment Trends
    Across the World and in India
    Source:
    Capgemini World
    Payments Report,
    2023
    Source: World
    Payments
    Report, 2021:
    Capgemini
    Select Distributed Payment companies

    • Block (Square)

    • Fampay

    • Mswipe

    • Open.Money
    Select B2B Paytech companies
    • Coupa
    • Combined payments and cash management service
    • Business Spend Management
    • Stripe
    • Internet payments infrastructure
    • Fraud mitigation, sending invoices, Issue virtual and physical cards, Checkout friction
    reduction, Finance for business, Business spend management
    • EVO Payments
    • Integrated global payments systems
    • 150+ transaction currencies; Partnerships with prominent banks
    • PineLabs
    • POS payment systems | Payment Gateway facilities
    Global Payment Trends
    Some Country Insights
    Source: FIS
    Global Payments
    Report, 2023
    Source: FIS Global
    Payments Report, 2021
    Select Key Trends
    • A2A (Account to Account) payments – drastic increase
    • Driven by Real time payment rails, and seeing very large contributions from global
    developments such as UPI in India
    • Credit Card usage remains strong
    • Resurgence in discretionary spending, travel and back-end linkages to BNPL
    • Digital wallets: leading payment method globally both in e-com and POS
    • become major e-com payment method in Europe and US too
    • Cash continues to decline, but still relevant
    • BNPL evolves into next stage, Sustained by consumer interest in alternative
    credit
    • Challenges from inflation, higher interest rates and regulators
    The Indian
    Context

    This Photo by Unknown author is licensed under CC BY-NC-ND.


    India’s Payment Systems: A fast evolving one

    Source: Payment and Settlement Systems in India, RBI 2021


    Source:
    Payment and
    Settlement
    Systems in
    India, RBI 2021
    Source:
    Payment and
    Settlement
    Systems in
    India, RBI 2021
    Source:
    Payment and
    Settlement
    Systems in
    India, RBI 2021
    Source:
    Payment and
    Settlement
    Systems in
    India, RBI 2021
    Source: Press
    Information
    Bureau, GOI,
    2022
    Source:
    Payment and
    Settlement
    Systems in
    India, RBI 2021
    • Paytm
    • Mobile recharges to Payments
    Bank to Super App?
    Some • Razorpay
    Landmark • Payment Gateway to Revenue
    Development Management to SME Bank?
    s and Entities • IMPS, UPI & UPI 2.0
    • Pioneering real time payments,
    from instant payments to
    investment transactions
    • The digital payments ecosystem has made substantial progress on
    the supply or the issuance side.
    • On the issuance side, a wide range of payment services offered
    through

    RBI report on • bank accounts, bank branches, business correspondents, cards,


    mobile phone and related devices, backed by robust and
    resilient payments infrastructure including
    Deepening • RTGS, NEFT, IMPS, BHIM UPI, Card Networks, POS, BQR, ATMs,
    NACH, ECS, Mobile Wallets, APBS and AEPS.
    Digital • Needed now: an improvement on the demand or acceptance side of
    the ecosystem.
    Payments • high cost structures, including interchange fees, as well as
    limited financial service offerings impede merchants from
    accepting digital payments.
    • Cash - with its ease of usage, universal availability and
    acceptance, low cost to consumer, and no requirement of KYC –
    continues to play a significant role in payments.
    Period RBI-DPI
    RBI Digital March 2018 (base) 100.00
    Payments Index March 2019 153.47
    RBI, in January 2021 September 2019 173.49
    launched a composite Digital
    Payments Index, combining March 2020 207.84
    six parameters (and multiple
    sub-parameters): Payment
    September 2020 217.74
    enablers, Payment March 2021 270.59
    Infrastructure – Demand and
    Supply side, Payment September 2021 304.06
    performance, and Consumer
    Centricity. March 2022 349.30
    September 2022 377.46
    March 2023 395.57
    Challenges in the Indian context

    • Weaning away from cash


    • Digital Financial Awareness and Digital Financial Literacy
    • Digital payment Products for users across the spectrum
    • Need more options for non-smartphone users
    • Customer Protection and Security of Digital Payments
    • Cost and Connectivity
    Emerging Global Trends

    • Embedded Payments causing Embedded Disruptions


    • Sweeping Impact of Super Apps
    • Cryptocurrencies and CBDCs – encrypted Impact
    • Financial Inclusion imperatives
    • Real time Payments – a revolution where India is a leading light
    Thank you
    Dr. Neeraj Amarnani

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