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Digital Payments_Prateek Roongta_Final.pptx 0
ON TAP, CASHLESS, AND CONTACTLESS The path to ubiquitous e-payments
Prateek Roongta Partner and Director, BCG
1st March 2017
Digital Payments_Prateek Roongta_Final.pptx 1
Payments in India have evolved rapidly
The payments space has witnessed large scale disruption
• Digital at the heart and centre – innovative, mobile based solutions
being deployed
• Entry of non-banks as payments service providers – threatens
disintermediation of banks
Consumer needs and expectations are evolving rapidly
Banks are responding rapidly in order to retain their customers and balances
• Guided by the experience offered by e-commerce players like Amazon
and Uber
• Increasing mobile and internet penetration provides further impetus
• Thinking like "non-banks" to deliver cutting-edge payments
experience
Digital Payments_Prateek Roongta_Final.pptx 2
Bank led
Telco
led
Prepaid /
Wallet
Payment
banks
Ecomm /
tech
2012 and before 2013 2014 2015 / 2016
Source: BCG research
Winners not yet decided – there is whitespace but it is being taken fast
Entry of several new players
Movida Partners
and HDFC Bank
Pockets by ICICI
Bank
KayPay by Kotak
Mahindra
Ping Pay by Axis
Bank
SBI
Buddy
PayZapp
Lime by
Axis Bank
Pockets by ICICI
Bank
Ziggit by IDFC
Bank
Vodafone –
m-pesa
Airtel
Aditya
Birla
Paytm
India Post
FINO PayTech
Reliance
Vodafone –
m-pesa
Airtel
money
Idea MyCash mRUPEE by
Tata
Mobile
Money
BookMyShow
Flipkart Wallet
freecharge
MOWA
Chillr
Snapdeal iKaaz
freecharge
PRIZM
Ola Money
Momoe
Ezetap
MobiSwipe
Mswipe
Paytm
MobiKwik
ezeClick Oxigen PayMate
MoneyOnMobile ItzCash OxiCash
Simpel
YPAYCASH
PayUmoney
QwikCilver
QuikWallet
Digital Payments_Prateek Roongta_Final.pptx 3
Digital payments gaining traction
639
389
172
9553
0
200
400
600
800
1,000
Number of transactions (million)
+86%
2016-20171 2015-16 2014-15 2013-14 2012-13
814
604
255
108
33
0
200
400
600
800
1,000
Number of transactions (million)
+123%
2016-171 2015-16 2014-15 2013-14 2012-13
Mobile Banking Mobile Wallets
Value
INR billion 60 224 1,035 10 29 82
2,367 6,022 306 270 321 INR / Txn
206
341
4,040
10,375
8,704
13,631
307
377 1,124
Note: 1. 9months data is taken for 2016-17 Source: RBI; Payment System Indicators.
Digital Payments_Prateek Roongta_Final.pptx 4
Customers exploring digital payments beyond mobile recharge
22
29313136
5155
66
1620
28
1814
29
22
73
0
80
60
40
20
% respondents
Other
services
In store
(POS)
Fund
transfer
Travel
booking
Ecommerce Other
utility bills
Mobile bill
payment
Use cases
Prepaid
mobile
recharge
Non metro users Metro Users
POS payment and usage for other services low
Bill payment second largest use case
Prepaid recharge still the largest use case across metro and non metros
Source: Google-BCG market study based on Nielsen consumer survey Question: For what all purposes have you ever used a digital payments instrument?
Digital Payments_Prateek Roongta_Final.pptx 5
Convenience, not only offers, drive stickiness of customers to mobile payments
Co
nve
nie
nce
O
ffe
rs
Metros Non- Metros
66% 51%
48% 57%
Source: Google-BCG market study based on Nielsen consumer survey Question: Please select your reasons for using digital payments
Digital Payments_Prateek Roongta_Final.pptx 6
Customers open to using digital at physical POS
48
49
52
61
66
71
73
40 60 80 20 0 %
Unorganized retail
Travel and transport
Professional services
Utility bills
E-commerce
Organized retail
Food and entertainment
Large format POS use cases
Source: Google-BCG market study based on Nielsen consumer survey Question: Please tell us for which regular payments are you most likely to use digital payments instruments
Digital Payments_Prateek Roongta_Final.pptx 7
Merchants open to accepting digital payment
3 out of 4 merchants think digital will grow big and aid sales
41%45%
58%
84%
Agree that
convenience is the
largest reason for
continued usage
Value the avoidance
of this struggle for
change
Value not having to
store and manage
cash
Find it a convenient
way to account and
track transactions
Source: Google-BCG market study based on Nielsen consumer survey Question: Please select the reasons that apply to you for businessmen started accepting digital payments
Digital Payments_Prateek Roongta_Final.pptx 8
Merchant ACCEPTANCE will grow 10x
Organised Retail
10 Mn+ Merchants
1 Mn
Newspaper Vendor TV cable supplier
Coffee Shops Cycle Rickshaw
"Mom and Pop" Kirana Milk Man
Digital Payments_Prateek Roongta_Final.pptx 9
UPI and India Stack could be potential game changers
IND
IA S
TA
CK
Open Personal Data Store
CONSENT LAYER Permission "on demand"
IMPS, UPI, APB and AEPS
CASHLESS LAYER Financial tx "on demand"
e-KYC, e-sign, Digital Locker
PAPERLESS LAYER Documents "on demand"
Open access to biometric identification
PRESENCE-LESS LAYER Authentication "on demand"
Source: India Stack website, ispirt presentation, https://medium.com/wharton-fintech/the-bedrock-of-a-digital-india-3e96240b3718#.h0a1hgcp2
Digital Payments_Prateek Roongta_Final.pptx 10
We expect cashless tractions to overtake cash transactions in the next 5 years
2005 2010 2015 2020e 2025e
89%
11%
5%
78%
22%
13%
60%
42%
26%
41%
59%
39%
In 5 years DIGITAL
will be as large as CASH
Cash
Non-cash
Digital
92%
8%
1%
Note: Digital includes electronic payments, ACH, mobile based payments etc. Digital is a subset of "Non-cash" Source: BCG analysis
2022e
Digital Payments_Prateek Roongta_Final.pptx 11
Key questions for consideration of the panel What would drive large scale adoption of digital payment instruments?
What could be potential barriers for adoption?
What role can banks play in driving adoption of digital payments?
Can UPI really be a game changer? How to make it happen?
How can Fintechs collaborate with banks and FI to proliferate adoption?
How would digital payments providers build a sustainable business model?
What is expected from regulators / government to turbocharge adoption?
Digital Payments_Prateek Roongta_Final.pptx 12
Thank you
bcg.com | bcgperspectives.com
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