Building a better, secure payments future

Mobile, cashless payments, and e-commerce market competencies are the decisive factors driving the move toward a cashless society model.

By Gopakumar Subramonian

While digital payments have evolved significantly over the last few years, the financial services industry has witnessed an extraordinarily accelerated transition in 2020. Payment methods that were previously considered emerging or niche alternatives have become consumers’ preferred means of transacting during the COVID-19 pandemic, including a whole new suite of contactless and touchless alternatives for commercial transactions.

This effectively means that the way people interact with their financial institutions or favorite shopping brand is transforming with everything available at their fingertips and on their mobile device.

With its broadly available mobile and internet services, and effective mobile payment solutions, along with forward-looking regulatory developments, India is taking steps to increase usage of contactless or touchless payment solutions. The ongoing pandemic has further accelerated the need to digitize amongst businesses too.

With a surge in the number of consumers and merchants utilizing digital platforms, it is a priority to invest in the creation of a robust digital ecosystem. This will increase loyalty and engagement in the long run as digital becomes the new normal.

Purchasing via a mobile device continues to gain traction in e-commerce for the sheer convenience it offers to customers. ‘Shop and Pay’ is the emergent choice.

The emergence of contactless consumers: Undoubtedly, the most visible trend of the past year is the emergence of the contactless consumer. Increasing apprehensions about physical currency have led to a decline in cash transactions. Customers are demanding at-home service and touchless options. This transformation has impacted payments in two primary ways – the first is the increased use of Wi-Fi-enabled cards or mobile wallets at the POS, and the other is the rise of online or mobile prepayment through wallet applications and e-cards.

As hygiene standards have become more stringent, more people have turned to online interactions as well. People are adopting online ordering and this trend is going to continue post-pandemic.

Purchasing via a mobile device continues to gain traction in e-commerce for the sheer convenience it offers to customers. ‘Shop and Pay’ is the emergent choice. When consumers opt for purchasing anywhere, anytime, online merchants can respond with simplified, secure, and seamless checkout.

Ubiquitous digitization: Growing consumer preference for contactless payments has resulted in an increasing number of merchants and small businesses looking to go digital. UPI transactions will continue to rise in years to come. In addition, modern point-of-sale (POS) machines come with comprehensive tracking solutions to enable merchants to understand consumer buying patterns. The use of this data will allow merchants to operate more efficiently, streamlining inventory management and allowing for a better understanding of capital requirements.

Time for open banking system: Due to the pandemic, visits to a local bank branch have been prohibited or restricted. As a result, banks and other financial institutions are investing in tech-enabled solutions to allow customers to bank the way they want.

Adopting an ‘open banking’ approach democratises access to data and banking services to give customers more control over how they manage their money. Freeing customers from geography-dependent services could translate to increased customer loyalty through customised financial management and other potentially rewarding partnerships.

Security continues to be a concern: One of the most important aspects of digitization is security. People and businesses are more connected than ever, yet as our technology advances, so do criminal exploits. It is imperative to understand consumers and their preferences towards different modes of payment in order to build digital platforms that are both relevant and secure. Businesses are gradually becoming more open to moving services to the cloud, and they want the security to match.

Payment specialists: India’s financial landscape is quite varied, with idiosyncrasies visible across states. There is a need to tap into local specialists to cater to the needs of local markets effectively. This has led to the rise of ‘payment specialists’ who will help with licenses, market expertise, and operational bandwidth to complement the technology, domain expertise, and scale of global firms.

Purchasing via a mobile device continues to gain traction in e-commerce for the sheer convenience it offers to customers. ‘Shop and Pay’ is the emergent choice.

The pandemic has caused a transformative shift in the financial ecosystem by rewriting the rules. All participants in the ecosystem are rethinking their approach to delivering financial services. In the past, digitisation and the implementation of technology solutions were an afterthought. Today, it is an important business purpose function for the successful and seamless functioning of business operations.

In coming years, success will almost depend on how effectively organisations customize product offerings to cater to consumers and meet the requirements of real-time payments solutions. The growing consumer preference for mobile and cashless payments combined with advancements in technological infrastructure and e-commerce market competencies will be decisive factors in the move toward a cashless society model. Overall, an exciting digital journey lies ahead of us and there is a need to reinforce it with a robust payments infrastructure that makes security and trust an integral part of the digital experience.

Subramonian is Vice President, Fiserv Global Services

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