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Digital Payment Penetration and Acceptance in Tier-II and Tier-III Cities Still Face Some Obstacles

Despite the rise in the number of platforms that enable businesses to offer online payment experience to their customers regardless

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Digital, Payment, Cities
The Unified Payment Interface (UPI) also has been accepted well. Pixabay

Digital payment has been one of the key features of the government’s ‘Digital India’ initiative and online payment platforms and services have indeed spread themselves in the country. However, its penetration and acceptance in the tier-II and tier-III cities still face some obstacles, market players said.

According to Credit Suisse report, India’s mobile payments market is likely to touch $1 trillion by 2022.

Post the demonetisation, whereby Prime Minister Narendra Modi on November 8, 2016 declared that Rs 500 and Rs 1,000 denomination notes would become invalid, digital transactions shot up tremendously. The Unified Payment Interface (UPI) also has been accepted well.

Despite the rise in the number of platforms that enable businesses to offer online payment experience to their customers regardless of location, instrument or mode, still there is a long way ahead as the penetration has mostly been in tier I cities.

Digital, Payment, Cities
According to Credit Suisse report, India’s mobile payments market is likely to touch $1 trillion by 2022. Pixabay

RBI expects the country will have five million active point of sale (PoS) machines by the end of 2021. However, to achieve it, there are several hurdles to be crossed.

“Although the awareness and adoption of digital payments is increasing, the digital infrastructure needs to be strengthened further to ensure consistent reach and penetration across the Tier II and Tier III cities along with rural areas,” says, Sunil Khosla, Head Digital Business, India Transact Service Limited.

According to Manish Patel, Founder and CEO of Mswipe there is a need for easy and cost-effective payment acceptance tools for small and medium enterprises, micro-merchants, especially in tier-III and III cities as a segment, is still under-penetrated.

“They need acceptance tools that are cost-effective and easy to enable. In many cases, it is cumbersome for a micro-merchant to keep tabs of different means like wallets, UPI and bank apps,” Patel said.

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A huge market has grown for products which enable vendors to accept payments through credit and debit cards. However, the ground reality is that although there are around a 100 crore credit and debit cards in the country, the number of PoS terminals is not enough.

Digital payments service providers and adoption of UPI platform by national and international players like Paytm, PhonePe, Google, WhatsApp and Amazon have played a major role in the transition of rural India along with the urban segment in terms of digital payments.

Issues which merchants face are generally related to initial investment and the recurring cost affiliated with acceptance, which can be mitigated by introduction of low-cost devices or device-less acceptance via payment apps for accepting Bharat QR or UPI payments.

Experts further say, MSMEs can generate extra income by offering the entire digital ecosystem with options such as Bharat Bill Payments System (BBPS), Point of Sale machines and micro ATMs along with the digital payment wallets and platforms and payment banks.

Digital, Payment, Cities
Post the demonetisation, whereby Prime Minister Narendra Modi on November 8, 2016 declared that Rs 500 and Rs 1,000 denomination notes would become invalid, digital transactions shot up tremendously. Pixabay

“The acceptance of digital payment collection services can be further improved by simplifying and speeding up of the onboarding process, consistently educating the merchant and consumers on the benefit of accepting digital payments, the various factors featuring in the digital ecosystem and few risks attached to the same,” Khosla said.

Market players and sector experts are of the opinion that EMI (equated monthly instalments) on debit card is going to be the game changer. As only a small section of the population has access to formal loans, EMI on debit card can tap this market and play a significant role. It would encourage consumers to shift to digital payments and opt for easy EMI options. This also enables merchants to offer more affordability solutions to their consumers.

Vicky Bindra, CEO of Pine Labs says: “At a time when our country has set an ambitious growth target in the volume of digital payments, migrating smaller merchants to digital payments holds a key. Hence in order to improve the acceptance of digital payment solutions among merchants, financial services need to create services and refine existing solutions.”

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“It is equally important to educate and create a sense of trust and secure digital payments amongst 500-600 million consumers based out of tier II and tier III cities in India,” Bindra said. (IANS)

Next Story

Oracle Dials SaaS 2.0 to Help Indian Businesses go Digital

Oracle, which is set to organise 'Modern Business Forum' in Mumbai on December 17 to tell a story about how it is accelerating customers' digital transformation in India, embeds AI and ML into SaaS applications

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Oracle
Oracle office. Wikimedia Commons

BY NISHANT ARORA 

Before the noise of Hybrid Cloud, multi-Cloud and various ‘As-a-Service’ offerings took over our minds, it was Software-as-a-Service (SaaS) Cloud model that ruled the industry as an ‘on-demand software’, which is only gaining momentum with the Industry 4.0 era.

California-based Oracle, which has been a pioneer in helping enterprises run their daily affairs across sales, marketing, HR and finance verticals with its Cloud applications, is now set to empower both large enterprises and small and medium businesses (SMBs) in India with the next-gen SaaS solutions.

According to Prasad Rai, Vice President, Applications, Oracle India, in India and globally, the number of companies choosing Oracle SaaS solutions over the competition is increasing.

“These customers are a mix of large firms, mid-size SMBs and Cloud natives. We have helped large and older firms like Indian Oil, Hindalco, Indian Hotels, SBI Card, Genpact and Sandhar Automotive in their digital transformation.

“At the same time, we have Cloud-native disruptors like Oyo Rooms, Rivigo Systems and KLAY Prep Schools in our customers’ list,” Rai told IANS.

The requirements for both the set of organisations is very unique.

“Oracle has understanding and dexterity to support customers of any size, with every thinkable requirement from any sector. We have customers from sectors like manufacturing, retail, hospitality, social welfare, engineering and construction, logistics, oil and gas, among others,” Rai elaborated.

According to Gartner, the SaaS market will grow up to $110.5 billion by 2020, from the current $94.8 billion.

Oracle Launches Intelligence Map for Close Look at Internet.
Witnessing double-digit growth in India for past 3 years: Oracle. IANS

SaaS has become a common delivery model for many business applications, including customer relationship management (CRM), management information systems (MIS), enterprise resource planning (ERP), invoicing, human resource management (HRM), talent acquisition, learning management systems, content management (CM), office software, payroll processing software, management software and so on.

According to Rai, Oracle Cloud applications, built on Machine Learning, offer the most complete application suite with the best technology, enabling fast innovation with a modern user experience and customer-first approach.

“In 2020, emerging technologies like artificial intelligence (AI), automation and Blockchain will cease to be emerging and will become the mainstay of Cloud computing in general and of the SaaS, in particular,” said Rai.

Businesses will invest in SaaS applications for churning out business intelligence.

“The organisations will incorporate analytics-based AI and ML to monitor and improve their core as well as secondary functions. In 2020, marketing and automation are likely to become more synonymous as marketers will use automation across their tech stacks, from their email marketing tool to their accounting system and CRM,” he explained.

Till now, businesses are using SaaS on providing core functions like HR, finance, operations, etc.

In the coming times, according to the Oracle executive, businesses will seek vertical-specific SaaS solutions.

“Though Blockchain has not gained much steam in SaaS, in the coming year, however, it could pick up a significant amount of speed,” he added.

The SaaS market has been growing over the past few years and with the advent of the industry 4.0 era, the scope of the growth of the SaaS market is not going to diminish soon.

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According to Rai, the real opportunity for technologies like AI and ML, IoT, Blockchain, containers and serverless and human interfaces is to enable companies to embrace innovation on a scale as we’ve never seen before.

“Enterprises have gone from experimenting with these technologies in a sandbox to implementing them for mission-critical applications, to building new business models and creating business value,” he said.

Oracle, which is set to organise ‘Modern Business Forum’ in Mumbai on December 17 to tell a story about how it is accelerating customers’ digital transformation in India, embeds AI and ML into SaaS applications.

“For example, built-in AI tools are integrated into Oracle CX applications that better predict account health, deliver next-best-service actions, automate answers, and provide a more personalised service,” Rai informed. (IANS)