Contactless Payments Will See Widespread Adoption In Coming Years: Reeju Datta

India is slowly proving itself to be a leader in digital payments innovation.

In fact, the UPI infrastructure has become a prime example in the field of finance interoperability. (Even Bill Gates agrees!)

However, there is still a long way to go.

A group of panellists, including our Co-founder, Reeju Datta, gathered on a roundtable to discuss exactly this

digital payments innovation in india

The Global Fintech Fest (conducted between 27-30 September 2021) brought together this group of seasoned experts to share their views on one of the most pressing questions of our times. 

  • How can we ensure that India stays ahead in the digital payments field? 
  • How will fintech and bank collaborations evolve? 
  • And most importantly, what will be the next big innovation prompting widespread adoption?

Sounds interesting?

Well, wait till you have a look at the discussion points! 

Making a Business Case For UPI Payments

UPI payments have evidently taken over all other forms of payments in India. 

UPI payments for businesses

Having said that, it’s only fitting to ask the next big question. 

How can we build a business case for UPI payments? 

Well, for a payment aggregator and banks, revenue is dependent on the number of transactions. So, building a business case is directly proportional to the number of UPI transactions and digital financial penetration in the country.

But, how do we achieve that? Experts bring out some interesting ideas:

  • Linking UPI with credit
  • Utilising UPI for cross-border remittances
  • Faster UPI payment processing time 
  • Contactless payments using UPI as the payment mode
  • Increasing interoperability of payment infrastructure. 
  • Omnichannel UPI payments: online and offline payments (digitizing COD order into payment links)
payment links

However, any discussion on UPI payments for businesses (or any digital payment mode, for that matter) isn’t really complete without weighing in on the players. 

Legacy Banks Vs Challengers

Historically, traditional banks have held a monopoly over financial products and services. 

However, fintech players and Banking as a Service platforms have truly transformed the game. 

Experts discuss the future roles and responsibilities of these players in the UPI ecosystem. 

Here is a quick run-through:

  • Fintech-Bank partnerships are here to stay
  • Financial inclusion should be one of the major goals of these partnerships
  • Banks have the mantle of spreading awareness of financial products and services
  • There’s a need to encourage fintech serving niche and unbanked sections of society
  • Prevalent need for innovation in the B2B space 
  • Internal efficiency of legacy bank systems must be prioritized

it is important to note that Indian regulatory authorities have been very encouraging of Bank-Fintech partnerships.

In fact, RBI’s recent move (Regulatory Sandbox on Cross Border Payments) has further cemented their resolve to bring banks and private players into the discussion. 

However, as technology evolves, the responsibilities of private fintech players are evolving as well. In such a situation, what would the success criteria for fintech players look like?

How Do Fintech Players Define Success?

Fintech in itself is a rather universal term. 

It is an umbrella term for third party payment processors, payment gateways, BaaS platforms, B2C financial services, payment apps and so much more.

However, here are some success criteria that may be applicable for most players in the ecosystem.

  • Successful Bank-Fintech partnerships
  • Excellent customer experience for merchants and end-customers
  • Sachetizing payment solutions for every financial need of customers
  • Finding use cases for fintech products and personalizing them for certain sections
  • High customer trust and robust data privacy systems

The Next Big Thing In Digital Payments

Yes, India is currently leading the world in digital payment infrastructure. 

But it’s only natural to ask: what will be the next big move with widespread adoption in the digital payment space?

Well, here is what experts have to say.

  • Contactless Payments
  • Prepaid Payment Instruments (PPIs) as a proxy for bank accounts 
  • Affordable payment stack (EMI)
  • Buy Now Pay Later as a payment mode
  • Upgraded backend systems for faster payment processing

Needless to say, all the major upcoming innovations are planned out on the basis of the open banking infrastructure. 

Experts shared their thoughts on the same as well. 

Open Banking Transforming Digital Payment Industry

Open banking APIs help in democratizing customer banking information. In turn, it can be used to increase customer satisfaction with financial products. 

Experts agree that the use of open banking can be categorized into two major buckets.

Open Banking For Decision Making

Open banking can help account aggregators and fintech gets access to customer data. This may help in offering: 

  • Competitive pricing
  • Simplified view of customer financial details 

Open Banking For Transaction

Neobanks or payment services providers (PSP) could use open banking to create curated sachetized solutions for customers. 

From the customer’s POV, these curated solutions will be available on single platforms. However, on the back-end, neobanks, fintech and banks will collaborate to provide these solutions. 

It’s safe to say that the future of banking and financial services is very exciting. 

The proactive collaborations between banks and private players are encouraging. Furthermore, the Indian regulatory authorities are further motivating players to embrace innovation. 

Needless to say, we can expect some big changes in the digital payments space. 

After all, it’s not just about pushing India ahead in digital payments. 

It’s about ensuring that we stay ahead.

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