Payments Landscape in India

Solidifying the financial transaction process

September 2016
India: Innovation driving growth in payments

1 A growing landscape 120+

firms

2 Growing market opportunity >30 per cent of

unbanked population

3 Acceleration in funding >USD 1 billion

funding since 2015

Mobile wallets
Birth of new business models – mobile wallets,
4 prepaid cash cards
USD 6 billion
opportunity by 2020

India to slowly hold a prominent position in the >10 per cent of the
5 global payment landscape global market by 2020

2 Payments Landscape in India - Solidifying the financial transaction process

Table of Contents

Need for payments 04

Global payments market and landscape 05

Evolution of payments - India 06

Payment landscape 07

Key drivers 08

Funding 09

Emerging trends 10

Challenges 13

Outlook 14

Appendix: Products profiling 16

3 Payments Landscape in India - Solidifying the financial transaction process

Payments industry – Solidifying the concept
of money!
India has predominantly been a country of cash so far, with almost 95 per cent of the payments transactions
annually being settled through cash/cheque only. Cash has its own limitations when it comes to settling financial
transactions

1/3rd of the country’s population is unbanked that provides a tremendous scale and opportunity to achieve
financial inclusion

Rising connectivity is an enabler, with 520 million smartphone users

Innovation in tech and payment systems; NFCs, QR code, Bitcoins, Wallets, payment through sound waves

Delinking of financial and geographical barriers, with a recent initiative by RBI providing license to 11 companies
including Paytm for setting up payments banks; Jan Dhan, Aadhaar, Digital India and Digilocker to find creative ways to
deal with each other and could catalyse a digital shift

Willingness of people to go cashless; over 130 million mobile wallets issued

4 Payments Landscape in India - Solidifying the financial transaction process

Global payments market – Exceeding USD 2 trillion
by 2020
Not exhaustive
Global Payments Revenue Payments Landscape
USD trillion
Payment
>6% ATM & POS Services Transaction Gateways and Platforms
6%
>9%

2.3

1.7 1.8
1.5

2013 2014 2015 2019

• Facebook entered the payments space by offering users the

Online/Mobile Wallets
convenience of free peer-to-peer payments through its Remittance Cash Cards
messenger app
• Launch of Snapchat’s Snapcash, a similar feature
• Samsung announced its acquisition of LoopPay (unveiled
Bitcoin
later as Samsung Pay), a mobile wallet that competes with
Apple Pay
• Google’s recently-announced Android Pay

Source: Mckinsey & Co, MEF, Press articles, NASSCOM

5 Payments Landscape in India - Solidifying the financial transaction process

From cash to digital payments – The story
looks exciting
Not exhaustive

Roadmap of Indian Payments Products

Set up 2010 Onwards

Set up 2005-2010
Digital Disrupters
Set up Pre 2005 Digital Natives • Mobile wallets – independent/ telco based
• mPOS
• Payment gateways
Augmenters • mPOS
• NFCs, QR code scanners
• Prepaid cards/ P2P/ social payments
• Payment gateways • Card readers
• Bitcoins
• 3rd party payment • Financial inclusion
processors • Mobile wallets

Source: PwC, NASSCOM

6 Payments Landscape in India - Solidifying the financial transaction process

India: Healthy Payments ecosystem with
>120 players
Not exhaustive

Payments Landscape
Payment
ATM & POS Services Transaction Gateways and Platforms

Online/Mobile Wallets Remittance Cash Cards

Bitcoin

7 Payments Landscape in India - Solidifying the financial transaction process

Huge market opportunity and an enabling support
system have been the key drivers

Diverse business
Easy to use mobile functionalities offered by
New bank licenses and well Online commerce enabling
application interfaces, banks through mobile
funded Fin-tech solutions delivery through innovation
improved customer interface, niche payment
ensure affordability in mobile transactions
experience banks and non-bank fin-
tech startups

Payments landscape encompasses a new revolution with focus on large potential customers that have
struggled with:
• Access to formal financial services
• Available services being low on utility and convenience
• High on cost and complexity

Source: RBI, PwC, Press articles, NASSCOM

8 Payments Landscape in India - Solidifying the financial transaction process

Funding gains momentum in Indian payments
industry: >USD 1 billion invested since 2015

Mobile wallet provider

Raised USD 25 million in

Series C funding in 2016

Mobile recharge and

bill payments platform
Payments Raised USD 80 million Series C
Gurgaon
Online payment
funding in 2015 2009
gateway solution
Jaipur Raised USD 9 million in
2013 Series B funding in 2015

invested in start-ups
USD 1.1 billion since Jan 20151
Mumbai
Hyderabad Online citizen services
2011 bill payments
2012
Key growth segments:
Raised USD 10 million funding
Payment gateways, mobile wallets from SRI Capital in 2015

Bangalore
Top investors: 2011 Mobile PoS and payments
processing solution
Mobile payments
platform Raised USD 23 million in series C
Success story: Raised USD 25 million Series C
funding in 2015

Paytm, an online payment platform funding in 2015

Start-up Offering
received USD 635 million funding
Hardware
in 2015
Only software/service
Source: News Articles, NASSCOM
Notes: 1. Investment numbers do not include undisclosed deals;

9 Payments Landscape in India - Solidifying the financial transaction process

Underlining 4 key important trends shaping India’s
payments industry

• Plays a pivotal role in bringing millions of unbanked Indians into the fold of banking
1 Licensing to 11 payment banks • These banks facilitate money transfers and sell insurance and mutual funds. Besides, they can issue
ATM/debit cards, but not credit cards

Innovation in the traditional • Traditional banks jumping into the fray with mobile wallets and advancements in payments
2
financial market

Increasing electronification/ • Encourage electronic payment systems for ushering in a predominantly cash based society in India
3
mobile adoption • Increasing adoption of smartphones, tablets and speedy access to internet through broadband, 3G etc.

• Emergence of specialist players across the value chain

4 Diversification • Explore large base with wider options to attract and maintain customers

Source: RBI, Mckinsey, NASSCOM

10 Payments Landscape in India - Solidifying the financial transaction process

While traditional banks are innovating, licensing to
payment banks gives an added push
Licensing to 11 payment banks Innovation in the traditional financial market
• Payment banks allow mobile firms, supermarket chains, and • Big Indian banks are aggressively on the roll out of digital
others to cater to individuals and small businesses, thereby, payments with new features and value add services
supporting the financial inclusion
• Differentiates with better solutions like eWallets, mobile apps
• Set up as a differentiated for a seamless baking experience and other specified services
bank and will confine its over and above internet banking
activities to acceptance of
• Develops an appetite for startups – building the payments
demand deposits,
ecosystem further
remittance services,
internet banking, and • Partnered with ToneTag to allow people to pay using
other specified services sound waves or NFC
• Not allowed to lend to • Tied up with money transfer app Chillr through which
customers or issue credit an HDFC customer can transfer money
cards. They can, however, • Partnered with mPay, to offer complete end-to-end
accept deposits of up to Rs merchant centric mobile POS across multiple cities
1 lakh and can offer
current and savings • Partnered with Ultracash Technologies to launch
account deposits payments processing through sound waves where
payment data is securely transferred from one device
to the other using unique ultra-high frequency sound
waves
Mobile wallets offered by Banks

ICICI Pockets State Bank Buddy HDFC Payzapp

Source: Press artcles, Yourstory, NASSCOM

11 Payments Landscape in India - Solidifying the financial transaction process

Growing digital metrics helping in electronification
of payments
Increasing electronification/mobile adoption Diversification
Growing digital metrics helping in electronification • A slew of new products are emerging in this space –
1
• 996.66 million mobile subscribers • Paynimo is creating a ‘Super wallet’ of your existing debit
• 375 million internet user base
2 cards, credit cards and bank accounts. This provides us the
3
choice to decide how we want to pay for various
• 300.22 million mobile internet users transactions
Customers are moving towards ePayments due with: • Paytm to go global with Uber tie-up which will let Indian
• Simplification of various utility bill payments travellers take an Uber ride and pay in Indian currency
• Serves their cashless appetite • Cashless wallets are adopting a revolutionary approach towards
‘paperless’ economy. Diversifications leads to:
• Availability of offers/incentives
• Need for a captive audience base while targeting niche
• Ability to pay anytime and anywhere (Eg: Freecharge for eCommerce buyers)
• Playfield in (Eg: Paytm won a payment bank license)
• Explore large base with wider options (Eg: MobiKwik
pivoting for extending short-term credit to its existing
customers and is in talks with banks for enabling small
saving through FDs or mutual funds)

~70 – 80 per cent Indians will use their mobiles to access

internet-enabled services by 2018 Identifying
New Uses

Note: 1) As of Sep 30, 2015; 2) As of Nov 15, 2015; 3) As of Jun 30, 2015; 4) Estimated for FY2016
Source: Deloitte, IAMAI, TRAI, Zinnov, PM Jan Dhan Yojna Website, PwC, PCI, NASSCOM
12 Payments Landscape in India - Solidifying the financial transaction process
Mitigation of challenges is the need of the hour

• User verification is important for any financial transaction

Verification • Data security and theft is a challenge
and security • Attackers can steal and misuse data, leading to painful
disclosures

• Lack of connectivity and loss due to bad mobile network

• Rising transaction volumes can lead to performance bottlenecks as
Infrastructure inefficient processing limits degrade customer experience
• Adoption of high performance software
• Limited bank accounts and financial systems

• Limited awareness among merchants

Awareness • Simple integration of payments systems
for adoption
• User adoption towards cashless mechanism

13 Payments Landscape in India - Solidifying the financial transaction process

…And here lies the future opportunity
JanDhan initiative has made a dent in unbanked,
identifying newer opportunities to strengthen the
payment mechanism

557 2.5X

~2X
>2X • Expected financial inclusion of 200 million
population by 2020
233
250 • Over 250 million mobile wallets enable a
100
>130 way towards a cashless economy - removal
of black money

• More diversification and partnerships –

2011 2015 2020 banks will marry more startups
Unbanked population (in millions) • Maturity and shakeout - large scale
Mobile wallets (in millions) integration to acquire scale and reduce
competition
• 216 million Pradhan Mantri Jan - Dhan Yojana
(Accounts as on 20.04.2016)
• ~70 – 80 per cent Indians will use their mobiles
to access internet-enabled services by 2018

Source: PM Jan Dhan Yojna Website, PwC, IAMAI, NASSCOM

14 Payments Landscape in India - Solidifying the financial transaction process

Appendix – Products Profiling
Product Profiling (1/7)

Year of Product
Key Products
Inception Category
One97 2001 (PayTM was Transaction • Paytm is India’a one of the prominent digital goods and mobile commerce platform. It uses an RBI approved semi-
Communications Ltd. launched in gateways and closed wallet.
2009-2010) platforms;
• India'a one of the prominent digital goods and mobile commerce platform
Online/Mobile
Wallets • Uses an RBI approved semi-closed wallet

Atom Technologies • Paynetz: An internet payment platform

Transaction • Interactive Voice Response (IVR) helps organizations to accept payments via debit and credit card over a phone call
gateways and IVR system
2006
platforms; • Mobile Payment Solutions: An application that allows payments through debit/credit card, IMPS, cash cards and
Online/Mobile net banking
Wallets; • PoS services such as merchant sign-up, installation of terminals, training etc.
ATM and POS • Atomz Prepaid Card/Wallet: Offers corporate pre-paid card/wallet to manage food, travel, R&R and medical
Services expenses

In-Solutions Global • ISG Payment Gateway: An Integrated payment gateway

• Card Management Solutions, including management of credit/debit/prepaid cards
• SCMS-EMV provides encryption, purging, FRM and key management, thus, limiting fraud instances.
Transaction • Interchange Fee Management has the capability of computing network fees. Interchange fees are determined by
1988 gateways and different payment schemes, transaction types and card types. ISG also suggests the appropriate rates and thus
platforms simplify the complexities involved
• Merchant Management offers end-to-end system from merchant on-boarding to settlement.
• Transaction Manager processing, analysing, and transaction trace in post facto environment

Paymate Transaction • PayMate Xpress Platform is a one click secure payment solution for business and merchants
gateways and • PayMate Rural Banking Solutions (Mobile Kisan Credit Card) is 'mobile money credit delivery system' or 'direct cash
2006 transfer' facility, supporting farmers in rural areas
platforms

16 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (2/7)

Year of Product
Key Products
Inception Category
GoFrugal • Retail POS Software: Comprehensive retail billing software providing faster billing, better inventory management,
performance tracking, analysis, easy 3rd party integrations, CRM, and store management.
ATM & POS • Restaurant POS Software: The software provides restaurant billing, management of recipe/menu, guest
2004
Services seating/service, production & inventory, customer offers, deliveries, customer preferences, waste management,
and integrated accounting.

Financial Software and • FSS’ Card Management Platform provides complete card life cycle management solutions for debit, prepaid and
Systems (FSS) smart chip cards. All card types including magnetic-stripe, EMV™ chip and virtual cards are supported.
• FSS Toggle, by virtue of a mobile app, allows customers to remotely control all aspects of their existing payment
ATM & POS cards. Cardholders can set control preferences, receive real-time alerts, and respond to fraud alerts.
Services; • FSS Merchant provides integrated, secure and browser based end-to-end cards acquiring and merchant
Online/Mobile management solution.
Wallets; • FSS Recon is a data analysis platform that addresses and simplify reconciliation processes, along with settlement
Remittance and dispute management.
• FSS Mobile Pay is an application that allows mobile banking and payment
• FSS dWallet is a digital wallet that allows customers to create card with multiple funding options. Customers can
then easily make payments using ‘’tap and pay’ technology. The wallet is well integrated with payment gateways
2001 and integrators.
• Financial inclusion programs
• FSS eCASH supports online and offline transaction processing and card issuance, and enables banks in
offering financial inclusion to un-banked sectors
• FSS Biometrics is a biometric authorization solution
• FSS Connect is a messaging middleware solution
• FSS Bill Pay is a comprehensive electronic bill presentment and payment solution
• FSS Cross Sell is a solution that allows banks to cross-sell products and services across their ATM and online
banking channels
• FSS Green Pin provides online pin generation and forwarding solution
• FSS ATM Monitor helps in quickly identifying and addressing ATM related issues
• Other solutions include FSS Currency Convert, and FSS Loyalty Management

17 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (3/7)

Year of Product
Key Products
Inception Category
Acute Informatics • EasyBankCore™ is an enterprise browser-based core banking solution.
Pvt. Limited • Easy Shopper is a POS and financial accounting system.
ATM & POS
2005
Services

Banking Payment Solutions:

• ATM Outsourcing & Managed Services: End-to-end ATM management, including site identification, machine
AGS Transact
Technologies Ltd. deployment, maintenance, and management.
• Cash Management Solutions: Via a wholly-owned subsidiary, focuses on the cash-in transit, safe keeping, and
management of currency and valuables for banks, financial institutions, and retailers.
• Transaction Switching Services offer integrated payments processing, card management and merchant acquiring
solutions
• Electronic Payment Solutions is a mobile POS solution that provides end-to-end transaction processing
Banking Automation Solutions
ATM & POS • Banking Value Added Reseller, which includes ATM and cash deposit systems, video teller solutions, queue
2002 management.
Services
• Software – ProClassic/Enterprise delivers end-to-end functionality for the self service delivery channel. It also
provides a J2EE platform for integrating all other delivery channels.
• Currency Technology Solutions provide currency counting, sorting, counterfeit note detection, and sorting products
for banks, retail and financial institutions
• Software – Intelligent Cash Deposit; Note Sorters
• Banking Services include in-house testing and repair centre and a technology support centre.
• Software – ProClassic / Enterprise; ProTect Work/Enterprise; ProCash/Fonet; daNCe; ProSales Marketing;
Multi-Vendor Software; ProCash Analyser; ProView
• Other Automation Solutions: Also provides automation for the retail, petroleum, and colour sectors.

18 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (4/7)

Year of Product
Key Products
Inception Category
Transecute Transaction • Transecute is an online payment gateway that offers advanced heuristic fraud detection
NA gateways
and platforms

DirecPay Transaction • DirectPay is an online payment gateway with payment options encompassing credit cards, debit cards, net banking,
NA gateways and and cash cards
platforms

Oxigen Services Transaction • Mobile Wallet

(India) Pvt. Ltd. gateways • Money Transfer
and platforms; • Digital Payments
2004 Online/Mobile
Wallets;
Remittance;
Cash cards

Tarang Software Transaction • A whole host of solutions including payment gateways, payment processors, fraud management, mobile & e-
gateways wallet, card management platform, host card emulation, and analytics
and platforms;
2000 Online/Mobile
Wallets;
ATM & POS
Services
• Online Payments: Offers solutions that facilitate online purchases from a merchant’s website and helps them to
E-Billing Solutions collect payment from the end customers through net banking, credit and debit cards etc.
Transaction • Offline Payments: Equipped with bluetooth or GPRS and the latest encryption technology, offers offline payment
2005 gateways solutions
and platforms • Fraud Prevention: Using powerful tools such as device fingerprinting and real-time behavioral mapping, block
fraudulent transactions

19 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (5/7)

Year of Product
Key Products
Inception Category
Pine Labs • Pine Labs' Payment Platform: A cloud-based PoS solution
• Plutus TRM Pine Labs Transaction Reconciliation Management system: A web-app that allows real time access to
all transaction data, and helps managing post transaction challenges
ATM and POS • myPlutus mobile app allows merchants to track their POS/EDC transaction data across all stores
Services; • Pine EMI allows merchants to offer EMI instantly at PoS
1998 Transaction • Pine Loyalty is a loyalty management solution
gateways and • Pine DCC offers currency conversion
platforms • Pine Payment Gateway
• There are many other offerings such as digital gift platform, automated campaign-based marketing, business loans
at PoS etc.

ItzCash Card Ltd. Cash cards; Offers a whole host consumer, corporate, government, and campus solutions.
Online/Mobile • Consumer Solutions include cash cards, money transfer, eWallet, and gifting solutions
Wallets; • Corporate Solutions include cash management, online payment gateway, gift cards, loyalty solutions etc.
2006 Transaction • Government Solutions are inclusive of disbursement management, and receivables management
gateways • Campus Solutions include campus cash cards
and platforms

Transpure Solutions 2011 Remittance • RemitLive is a web-based remittance platform

• TransactLive is a web-based application to generate invoices online

20 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (6/7)

Year of Product
Key Products
Inception Category
iCASHCard by GI Technology • iCASH is a semi-closed loop prepaid wallet for payments on the Internet and for domestic money remittance. Can
GIT was granted a be used for various purposes such as shopping online, buying recharge vouchers, buying air/train tickets, making
license by various bill payments, etc.
Cash Cards
RBI in 2009

Momoe Technologies • It is a location-based mobile app that enables people to pay on mobile apps. Momoe is now accepted at
Online/Mobile restaurants, coffee shops, grocery stores & apparel stores in India
2014
Wallets

MobiKwik • It is a mobile wallet for recharges, and shopping. It is available for use at more than 75,000 online and offline
2009 (Got its Online/Mobile avenues
license in 2013) Wallets

Mahindra Comviva Transaction • Mobile Financial Solutions:

gateways • Mobiquity® Wallet: It is an omni-channel digital wallet solution, that supports technologies such as NFC, QR
and platforms; Code, Biometrics and BLE.
Online/Mobile • Mobiquity® Money enables international remittance
1999 • Mobiquity® Banking offers seamless mobile banking solutions
Wallets;
Remittance; • PayPlus converts the mobile into a POS device, enabling remote card acceptance, and serving customers
ATM and POS anywhere.
Services • PreTUPS™ is a recharge solution

21 Payments Landscape in India - Solidifying the financial transaction process

Product Profiling (7/7)

Year of Product
Key Products
Inception Category
Zebpay • Solutions that enable buying and selling of bitcoins. Works in 3 simple steps:
• Download app
2011-2012 Bitcoin • Verify ID
• Buy or sell bitcoins (for buying, payments to be made to their bank account)

Secure Bitcoin • Coinsecure enables buying, selling, and accepting bitcoins.

Traders Pvt. Ltd 2014 Bitcoin

Kyash • Kyash is an automated and secure system to enable payments offline. It works in the following ways:
ATM and POS • At the check-out page, Kyash payment option is integrated.
2012 Services • When the customer selects ‘Pay by Kyash, he receives an eight-digit code, along with a list of nearby payment
outlets.
• Once the customer makes the payment, the seller is automatically updated.

A Little World Pvt. Ltd. • Zero, a payment system that is based on near field communications mobile phones, contact-less RFID smart cards,
Transaction
an integrated biometrics authentication system, amongst others.
2000 gateways
• mZERO (mobile version of ZERO) is available as a self-service payment option, allowing over-the-counter and
and platforms
remote payments.

22 Payments Landscape in India - Solidifying the financial transaction process

Plot No 7 to 10, Sector 126, Noida, Uttar Pradesh 201301, India
Phone: 91-120-4990111 | E-mail: research@nasscom.in
Website: www.nasscom.com