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TRANSACTIONS

2025

02
DIGITAL IS THE

PRESENT AND
FUTURE

THINKSTOCK
inancial technology, commonly known as Fintech, is
evolving at a pace unthinkable a decade ago. The
novel applications of this technology are spawning an
unprecedented number of new businesses and whole
new business sectors.

It is bringing into the mainstream disruption. In markets such as India, the


consumption market demographics massive pull factor - consumer demand
hitherto untapped in Asia, Africa, Latin and adoption - is matched by the
America and elsewhere. The intersection government's push - an almost single-
of mobile technology and financial minded resolve to make digital transaction
services is bringing about the financial the norm instead of dealing in cash. These
inclusion of nearly a billion unbanked forces are combining to make India the
people who are estimated to bring most exciting digital payments laboratory
transactions into the global commerce in the world. Even those consumers who
ecosystem that could top $3 trillion by have newly entered the financial
2025. mainstream expect, or rather demand,
one-touch transactions. Ease and
The revolutionary changes in the way reliability of transactions are emerging as
global payments and transactions are the key drivers rather than sops such as
conducted is a direct result of the fintech cash rewards and lower taxes.
advancements. And we have just begun
scratching the surface. The almost daily THE TECH
progress in digital technology and the LEAPFROG
scorching pace of internet data
penetration and smartphones are the India's mobile penetration revolution has
high-octane fuel sources propelling this been well chronicled. Now what we are

»
witnessing is the next (NOFN), the introduction of
phase where dirt cheap the Unified Payment
data and faster Interface (UPI) and the
connectivity is enabling Bharat Interface for Money
those with a smartphone to (BHIM) app are accelerating
access a whole new world the move towards a
of digital services. The cashless economy. This has THERE ARE FOUR
number of mobile internet given an impetus to the MEGATRENDS THAT
users in the world is likely emerging digital ARE DRIVING THE
to top three billion by 2020 transactions sector in India. DIGITAL PAYMENTS
from the current level of REVOLUTION
two billion. Nearly a third
of these new users will be THE EXPLOSION OF
from India. NEW DIGITAL-BASED 1.Continued
Today even the less CONSUMER SERVICES innovation
expensive smartphones and
have tremendous India has become the increasing
processing and computing largest user market for performance in
power. The cameras are social media giant digital technology
becoming ever more Facebook with more than
powerful. This will spur 250 million users, 2. Consumer
safe, fraud-resistant digital overtaking the US. This is demand and
transactions that use facial testimony to the rising expec-
recognition, biometrics and burgeoning mobile internet tations of
multi-factor authentication. penetration in India. For one-touch transactions
businesses such as Uber or
ecommerce companies like
3. The policy
RISING CONSUMER push towards
Amazon and Flipkart, `
EXPECTATIONS financial inclu-
connectivity to data is at
Not just in the hyper- the heart of their offerings. sion and the
connected First World, but The ability to use digital desire to marginal-
also in emerging conveniences is a big ize cash transactions
economies, consumers are driver for people to switch
4. An
demanding a seamless to smartphones. The
transaction environment. influence that Fintech is `explosion
Even at this early stage of having on the market is of essential
market maturity, Indian growing and the long-term consumer
users are rejecting digital potential is even greater. services ranging from
transaction services that Mainstream Financial e-commerce to
are not intuitively designed Institutions are rapidly app-based taxi hailing
and are cumbersome to embracing the disruptive that necessitates digital
use. Convenience is king nature of Fintech and transactions, and the
and will continue to reign forging partnerships in scale-up of these serv-
for the foreseeable future efforts to sharpen ices to mass adoption.
in the arena of payments operational efficiency and
apps. respond to customer
demands for more
THE REGULATORY innovative services.
PUSH
Digital India, Jan-dhan
banking accounts, Aadhar- INDIA IS People Mobile Internet Smart
based welfare delivery and BECOMING phone users users phone users
a relentless drive towards A DIGITAL
formalization of COUNTRY
transactions have been the
cornerstones of the current
government's policies.
Demonetization, a bold and
unexpected surgical strike
on the cash-driven #2 in the world #2 in the world #2 in the world #2 in the world
economy that abets tax
evasion is perhaps the best
example of the
government's commitment
2015 1250 mn 1000 mn 300 mn 240 mn

towards digitizing the


economy. Initiatives such
as Digishala the National 2020 1350 mn 1200 mn 650 mn 520 mn

Optical Fiber Network Sources: eMarketer, Ericsson, UN estimates, BCG research.

THE NUMBER OF MOBILE INTERNET USERS IN THE WORLD IS LIKE LIKELY TO TOP
THREE BILLION BY 2020 FROM THE CURRENT LEVEL OF TWO BILLION.

Transactions 2025 03

04
THE SIZE OF THE

PRIZE: HOW DIGITAL


TRANSACTIONS CAN
TRANSFORM INDIA

THINKSTOCK
ndia is witnessing a growth trajectory in digital
payments similar to the rest of the world. In fact, India
is expected to be the growth engine by 2025.
Demonetization and the cashless push have propelled
the growth to stratospheric levels. India has the
second largest mobile user base in the world with a
billion connections. Of that there are in excess of 250
million smartphone users.

According to Morgan Stanley, with 270 million unbanked into the financial
smartphone sales growing at a mainstream. In 2012, the volume of
compounded annual rate a little in excess mobile banking transactions was roughly
of 20%, this user base in India will likely on par with that of mobile wallets and pre-
double to 500 million by 2020. With paid instruments (PPI). According to a BCG
mobile data getting cheaper by the day, report on digital payments in India, PPI
nearly all devices are becoming internet transactions today are roughly thrice the
enabled. Even before demonetization, volume of mobile banking transactions.
digital transactions had been growing at
50% annually. ATM transactions are In the past, the banks had a monopoly on
growing at around 15%. The usage of transaction services. Now with the
Aadhar as a Know-Your-Customer (KYC) emergence of new fintech companies and
proof has made banking and mobile payment banks, the landscape is far more
banking more accessible. The Jan-dhan vibrant. Today telecom companies, banks,
initiative of the government has added mobile wallet firms and payment banks are

»
In the next five years, we see exponential growth in digital
vying with each other for

‘‘
payments in India. Digital payments will percolate to the
customers and a slice of the
market. With competition
vast majority of India, in both online and offline modes. I
comes cheaper and more believe that digital payments in India, in all likelihood, will
innovative services which grow by at least 50x in 5 years. With this meteoric rise in digital
will benefit consumers and payments, a large segment of Indian population – both consumers
further fuel growth. and merchants - will start enjoying the benefits of digital
payments and formal banking and financial services. We see India
Indians are now accustomed transitioning from its current cash dominant economy to digital
to a very seamless digital payment dominance. We, at Paytm Payments Bank, are constantly
transaction experience.
innovating and leveraging technology to simplify consumer
This is creating massive
new avenues for consumer
experience and provide best-in-class financial and banking
spends. India is today one services”
of the most attractive ■ Renu Satti,
markets for global e- MD & CEO, Paytm Payments Bank
commerce giants. The
battle between Amazon
and homegrown Flipkart the way the marketplace is the transactions will were made in cash. The
has now reached such epic evolving. The average size inevitably increase. digital revolution will
proportions that similar of a mobile banking invert the cash-to-digital
contests between transaction is upwards of Going by the growth money ratio dramatically.
multinational cola giants or Rs 10,000. Indians spend trajectory of India, the By 2023, digital
FMCG behemoths today an average of about Rs 700 country by 2025 could be a transactions will overtake
pale in comparison. App- through PPIs. It perhaps is $1 trillion market for digital the amount of currency
based taxi hailing services a sign that people prefer transactions. The cash to notes changing hands.
such as Uber and Ola are PPIs for impulse purchases non-cash ratio in India by
making car ownership in and depend on banking 2025 could be the exact In India, nearly 1.5 billion
urban India somewhat out transactions for large ticket reverse of what it is today. payment transactions
of fashion. And the ability planned expenditure. There By 2020 itself, the happen every day. The
to transact digitally is vital are some 90 million active merchant acceptance of majority of such
to the growth of what is wallet users compared to digital money is expected to transactions are person-
known as the 'gig' economy 70 million online banking increase by a factor of ten. to-merchant or P2M. This
for a wide range of service users. As more Indians take Smartphones will replace includes, grocery
providers from to ecommerce, and as the plastic cards and make PoS purchases, buying a
accountants to artists and ecommerce companies add machines and the ATM newspaper at newsstand,
everything in between. product categories such as network less important. mobile recharges, travel
groceries to their ticket purchases and
The transaction ticket value merchandise mix, the share Payment service companies suchlike.
pattern is an indicator of of wallets and the value of will soon have access to a
mindboggling volume of The current user base of
The Indian digital payments consumer transaction digital transactions in

‘‘
industry is in the midst of data. This data can help India is nudging 90
transitioning itself into a true everyone in the chain- million. It could more than
enabler for consumers and business from sellers, marketers, triple to 300 million by
and payment firms-to 2020 as the use cases for
alike. Customer centricity has emerged as tailor customized digital transactions grow.
the core focus for digital payment solutions offerings. A customer can New users from rural and
in the market resulting in digital be sold relevant digitized semi urban areas will
transactions doubling in the last year gratifications such as enter the market along
alone. From banks to fintechs and from discounted offers, with the affluent citizens
government to payment networks rapid coupons, and loyalty in cities who had mistrust
strides are being made towards making programmes. of technology. The creamy
the payment experience as seamless as This can work in layer or say the most
possible for the customer. While tandem with merchant affluent and informed 100
apps, creating a seamless million users would
Blockchain, Big data and AI and human omni-channel experience. contribute 70% of the
centric designs will continue to play a Enhanced customer digital transactions value.
significant role in shaping the future of experience and the ease By 2020 net digital
digital payments, it would be equally of transactions will be a transactions would top
critical for industry players to collaborate new driver of consumer $500 billion and double
and offer solutions that are aligned to the growth. itself to $1 trillion by
customers needs” 2025. The digital
In India, cash has always payments industry itself
■ Chavi Jafa, Head, Business Solutions, been king. In 2015, nearly would be worth $5 billion
India and South Asia, VISA four in five transactions by 2020.

INDIA HAS THE SECOND LARGEST MOBILE USER BASE IN THE WORLD WITH
A BILLION CONNECTIONS.

Transactions 2025 05

06
THE POLICY PUSH:

HOW GOVERNMENT IS
DRIVING INDIA TOWARDS
DIGITAL LEADERSHIP

THINKSTOCK
ew other governments in the emerging markets
have shown the commitment and willingness of the
current government in India towards a less-cash
economy.

The Indian government and regulators banking and remittance services to


have been at the forefront of digital migrant workers, low-income households,
payments innovations and financial small businesses, and other underserved
inclusion. The Indian payment industry is sectors. The RBI has 'in principle'
an outlier that is driving above-average approved more than ten such institutions.
growth in non-cash payments. In 2014, Such initiatives have triggered the strong
the Prime Minister of India launched a adoption of electronic payments and the
financial inclusion campaign (PMJDY: rise of new market entrants. Mobile
Pradhan Mantri Jandhan Yojana) that banking transactions tripled between
generated 125 million accounts within six 2012 and 2014, hitting 150 million in
months. In addition, the RBI has 2014. And mobile-wallet transactions
established new guidelines for have gone past m-banking transactions.
differentiated banks - institutions whose Pre-paid payment instruments providers
objective is to improve the state of (which offer m-wallets) have been
financial access by providing basic attracting growing interest from

»
Amount Transacted (Rs Cr) Transactions (Mn)
72 ● IMPS transfers declined in
61 65 November, the month that
47
IMMEDIATE PAYMENT 40 demonetization was announced,
SERVICE but picked up thereafter
37,839 35,501 46,525 54,901 52,512
● Between October 2016 and
Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 January 2017, there were a jump
342.1 of over 80% in both number of
261.1 295.8 280.0 transactions and amount
169.3 transacted through prepaid
PREPAID PAYMENT 126.9 payment instruments (PPI Cards
INSTRUMENTS and Wallets)

6,022.0 5,074.0 9,770.0 11,001.0 9,628.0 10,677.0


● Mobile banking transactions
Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17
DEMONETIZATION peaked in December 2016. At
110.6 million, these were more
IMPACT ON 110.6 106.1 95.4
107.3 than double of 44.7 million a year
87.5
OTHER MODES OF 78.1 prior. Amount transacted almost
PAYMENT MOBILE BANKING tripled at Rs 149,818 crore in
December 2016, compared to
113,578 136,570 149,818 138,298 127,993 171,853 Rs 54,000 crore in/ December
2015.
Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17
6.2 ● The UPI went live in August 2016
4.5 4.3 and got a huge fillip following
UNIFIED PAYMENT 2.0 demonetization. Growth appears
0.1 0.3 to have been impacted by the
INTERFACE
49 101 launch of the BHIM app towards
709 1,699 1,903 2,391 the end of December 2016.
Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17

consumers and have over micro ATMs and A notable few were: points, instant cashbacks
motivated banks to invest banking correspondent and referral rewards to
in their own digital (BC) outlets fueled the ●● INTEGRATION OF users. While some
payment offerings. growth of AEPS over the ENTERPRISE RESOURCE observers may have
last one year. PLANNING (ERP) OF doubts about the long-
Over the past twelve CORPORATES WITH THE term sustainability of
months, demonetization A few institutions have UPI SOLUTION FOR REAL- such offers, the
has attracted mixed rationalized charges for TIME MANAGEMENT promotional efforts
reviews. While a few NEFT, IMPS and RTGS to INFORMATION SYSTEM definitely provided an
businesses may have been encourage the adoption of (MIS) UPDATES impetus to users
impacted in the short to these systems. considering a switch to
medium term, digital ●● DISBURSEMENT OF digital payments.
payments companies stand The offline space has INSTANT LOANS BASED ON
out as one of the most evolved into the most THE FOOTPRINT The growth streak of
significant beneficiaries of recent battlefield for GENERATED BY DIGITAL digital payments is
the move. Post payment service PAYMENTS virtually certain to
demonetization, there has providers. Acquiring banks continue in the future. The
been swift embrace of have deployed almost 29 One of the most significant next push to the adoption
digital payments, and this lakh PoS terminals across changes in the payments of digital payments could
medium should continue to the country, up by almost landscape is the push come from relatively slow
see sustained adoption 95% from last year. This towards interoperability, adopters such as the rural
going forward. space has also attracted with instruments such as economy and the small
the attention of UPI and UPI allowing transfers and medium-sized
One of the talking points of PPI players, and many of between 55 banks, enterprises (SME) sector.
the digital payments story them have developed independent of the Government incentives
has been the phenomenal innovative solutions to acquirer payment service such as discounts on
growth witnessed by new assist large merchant provider mobile app. The digital GST payments and
age instruments such as outlets, micro-merchants, increasing adoption of the set-up of accelerator
Unified Payments cash on delivery payment Bharat Bill Payment programmes will provide
Interface (UPI), prepaid facilitators of ecommerce System (BBPS), Bharat QR an added boost. A few
payment instruments firms, etc., in accepting and interoperability specific use cases may
(PPIs), Aadhaar Enabled payments seamlessly over guidelines for PPI players emerge in the space of
Payment System (AEPS), mobile phones. Customers will lend a further push to business to business (B2B)
along with well- facing issues with cash seamless, secure and payments, Electronic
established ones such as availability post the note interoperable payments. Clearance Service (ECS)
National Electronic Fund ban began to experiment mandates, equated
Transfer (NEFT), Real Time with these digital payment Several payment monthly instalments
Gross Settlement (RTGS), modes. processing firms and (EMIs), person to
(Immediate Payment fintech companies government payments
Service (IMPS) and cards. Quite a few players rolled leveraged demonetization (P2G) in smart cities, etc.
out multiple solutions to penetrate the market. In These are likely to have a
The government's push for allied with digital an effort to expand their positive impact on
the use of Aadhaar to payments, which further market share, quite a few transaction volume size
authenticate transactions helped in their adoption. of them offered loyalty going forward.

THE INDIAN GOVERNMENT AND REGULATORS HAVE BEEN AT THE FOREFRONT


OF DIGITAL PAYMENTS INNOVATIONS AND FINANCIAL INCLUSION.

Transactions 2025 07

08
THE MEGATECHS

INFLUENCING
DIGITAL PAYMENTS

THINKSTOCK
S CUSTOMERS TRANSITION FROM cash transactions to
digital platforms, new challenges and opportunities are
emerging for the existing players in the payments sphere.
While payments providers understand this paradigm shift in
business, most are unsure about the strategy.

The task of reinventing and repositioning transactional instruments to context-aware


legacy payments systems is in most cases "smart" machines. The PoS system of the future
daunting, but it is not impossible. The won't be a dedicated card-reading machine but
chances of emerging on top of this a software solution capable of being installed
challenge are largely driven by a in most smart devices, anonymously collecting
willingness to embrace and accept the digital comprehensive customer data (both online /
revolution and to effectively adapt in time to offline purchase / search history) and
gain competitive advantage. Payments players performing real-time Predictive Analytics to
need to develop and execute a strategic provide various customized offers.
roadmap to best position themselves for
success. TOKENIZATION
Today, merchants are increasingly leaning
FOR SECURITY
towards solutions which make payments
processing passive. In other words, they want
The real threat of card data breaches and
the payments to happen instantly, invisibly
growing traction in mobile payments (NFC / QR
and conveniently for consumers. Behind this
code-based payments) have propelled the need
evolution is the constant endeavor to make the
for a future-proof security system. EMVCo and
purchase process fast and frictionless, and thus
major card networks have released technical
reduce shopping cart abandonment.
standards for payment tokenization solutions,
which are poised to become hygiene factors in
Examples of this trend are Visa Checkout,
any payments service, and its adoption will soon
American Express ezeClick, LoopPay, Apple Pay
become imperative. ACI Worldwide, a leading
or Apple Watch, etc. Convergence of offline and
global provider of payment and fraud prevention
online PoS systems are evolving from mere
solutions, advocates an all-in-one approach to

»
payment transactions that devices augmenting the transaction, with demand of present stock
includes a fraud screen for browser and mobile technology depending on in the specified vending
payments of any value to payment experience. the environment. machine. The
protect both consumers Consumers can pay using Payment credentials can incorporation of internet
and businesses from the a range of newly be stored remotely in the capability into more
costs of nefarious connected devices, cloud, or locally, in a devices, such as Apple
transactions. including connected cars, secure element, Watch, will increase the
household appliances, and depending on the form number of payment
The Internet of Things (IoT) most recently, wearables. factor and payment use endpoints that allow
brings consequences and In parallel, the IoT is also case. The consumer payments services
opportunities for changing the retail point experience can vary; it companies to earn fees.
consumer payments and of sale to include a ranges from pushing a
new commerce. The number of new touch button or using voice The emergence of
Internet of things (IoT) is points, including parking commands to a cryptocurrencies and
the network of physical meters, fitting room frictionless experience blockchain as a
devices, vehicles and mirrors, and vending based on location or technology itself will be a
assorted appliances that machines. sensors. Data is secured game-changer in money
are interconnected As a result, financial using a variety of transfer, remittance, and
through the internet institutions, payment techniques to authenticate electronic commerce.
which enables these providers, and technology the consumer and Blockchain is well and
objects to send and companies can now create transmit the payment truly moving out of the
receive data. IoT is innovative capabilities credentials securely. experimental labs to real
growing exponentially. that deliver increasingly life applications in the
There are some 9 billion frictionless, relevant, and We are looking at an financial services sector.
"things" that are already secure payment ecosystem of devices
connected. By 2025 there experiences. connected to the 'fog' Despite many incidents of
are likely to be around 30 network, which can security compromise,
billion connected devices. The IoT device uses a connect and transact in fraud, and volatile
The "things" that can be connectivity channel to real-time. For example, valuations, digital
interconnected range trigger a payment smart devices will sense currency platforms are
from thermostats to low stocks in the freezer, seeing increased
automobiles to ask for permission to acceptance. Not only
refrigerators to lightbulbs. order or automatically businesses and merchants,
For instance, cars can talk order the required stuff but also payments
to each other, and the after checking for the intermediaries like PayPal
refrigerator can by itself best offers available. We have started making
place groceries will see use cases where significant forays into the
orders. the owner of a smart domain of cryptocurrency.
vending machine can This comes as a challenge
Connecting more change pricing to the existing payments
devices opens dynamically from her services providers as
the door to smartphone based on a cryptocurrencies offer a
developing new prediction engine, which much cheaper way to
digital calculates supply and make payments.
experiences for
both consumers
and businesses. POS TERMINAL PENETRATION ACROSS COUNTRIES
One such experience is the
payment transaction,
including both the ability
to pay and the ability to NO. OF TERMINALS PER ’000 DEBIT CARD1
accept payment. IoT has 40
the potential to
33.2
dramatically alter the
transactions landscape. 26.9
30

Digital payments 21.4 20.3


continue to evolve, with 14.8
20 13.1
the inclusion of
payment-enabled IoT 12.5
UNITED KINGDOM

UNITED STATES

7.2 6.1
AUSTRALIA

10
GERMANY

2.0
TURKEY

FRANCE

RUSSIA
BRAZIL

INDIA2
CHINA

0
SOURCE: Euromonitor 2015, BCG Payments Model 2015.
1Data is for year 2015.
2Includes debit cards issued under Pradhan Mantri Jan-Dhan Yojana (PMJDY).

BY 2025 THERE ARE LIKELY TO BE AROUND 30 BILLION


CONNECTED DEVICES.

Transactions 2025 09
THINKSTOCK

● 10
WHAT DIGITAL
PAYMENT expect, and what brands and

PLAYERS MUST DO
revenue streams will be - or
can be - to banks and
merchants in the future.

The forces shaping the


payments market today are now
beyond the control of any single
organization (or indeed technology).
However, there are steps that enterprises
across the financial institution, retailer, and
billing organization landscape can take, that
ODAY, NEW will help them better prepare for - and
TECHNOLOGIES HAVE respond to - these shifts to ensure that they
make the most of the opportunities
EMERGED THAT WILL presented by global payments
DISRUPT - AND ARE, IN transformation. Here is what companies
need to keep in mind:
FACT, NOW ACTIVELY
DISRUPTING - THE ●● Payments investment shows no signs of
slowing down and organizations of all types
COMPLEX NETWORK OF must keep pace. The rate of change in
payments today in terms of form factor,
RELATIONSHIPS channel, funding mechanism, associated
INVOLVED IN MOST technologies, data integration etc., means
that payments is simultaneously becoming
RETAIL TRANSACTIONS. more complex and more critical. Investing in
capabilities is no longer a 'once and done'
proposition and organizations of all types
Players like PayPal and Apple Pay straddle must maintain a focus on their capabilities
existing systems while offering a more and at the least maintain a medium-term
consistent, more streamlined experience to roadmap.
consumers. Individual retailers in the US,
such as Target and Starbucks, are using ●● Strong payments
proprietary credit and pre-purchase cards, infrastructure is the backbone to all other
empowered with discounts and reward services. Legacy infrastructure remains far
incentives, to reinforce their brands. too prevalent across all corners of the
Changing payment systems means deep payments industry, and even where this can
changes to what banks and retailers be pushed to accommodate new tools and
fundamentally are to consumers, how and services, risks diminishing the earnings
why these consumers shop and what they benefits, and lacks the agility for long-term

»
DIGITAL PAYMENTS ARE GROWING RAPIDLY IN INDIA

Credit Cards Growth in IMPS MMIDs Debit Cards

29.8 111.7 165.2 29%


Mn Mn Mn
In March 2017 In February 2016 In February 2017

5.34 M increase in Increase in card holders year


card holders year on year in March 2017
on year
DEBIT CARDS: COMPETITION CREDIT CARDS: BOOMING
BETWEEN BANKS CREDIT CARDS
AMOUNT TRANSACTED

Total Cards: March 2017 DEBIT CARDS High Amount Transacted


in March 2017
28.6 times more Debit Cards 855
than Credit Cards Mn 2.4 Higher average amount per
transaction for Credit Cards, as
times compared to Debit Cards
SBI HAS HIGHEST CARDHOLDERS
29% Issued by
33% are SBI cards,
India has 855
Of total HDFC Bank
of Total million debit Cards
Cards cards in total.
` 32,887 Cr
PNB, at second Amount Transacted
position, is far 284.7 Increased by 45%
necessitate an open-
behind, with 55.3 Mn cards minded, collaborative
year on year
million debit cards. approach to succeeding in
the fast-moving payments
marketplace.
that get this equation providers in particular
continued development. wrong will certainly face holds the potential to ●● Last but not least,
Organizations must the consequences of this drive a whole new slew of concepts like "consumer
ensure they have the decision through payments innovation. comes first" and "follow
flexibility and agility to significant increases in the customer" should not
cope with today's non-lending losses, ●● Changes in the be forgotten while
constantly shifting erosion in brand payments ecosystem navigating through the
landscape. reputation, and more mandate a new day in digital mesh and
importantly, trust in their thinking about implementing Payment
●● The threat of card not payment services. partnerships and instruments. At the end of
present (CNP) fraud is relationships for banks, the day a payment is a
very real and must not be ●● Payments innovation merchants, technology means to a end and the
ignored. The success in extends to new payment providers and payments end target is to purchase
recent years of delivery and integration companies. Previously- fuel, pay for food, flag a
diminishing in-store fraud models. As more held biases toward cab, cross a toll way, top
risks is masking the organizations seek to homegrown solutions and up a sim card, pay for
challenge now rising in improve their payments single-vendor technology online purchase or even
the CNP space. A balance capabilities, new means of approaches should be pay a utility bill and not
must be struck between enabling payments will challenged by even the the technology or the
driving security and provide a range of largest entities as new payment process.
reducing payment friction. benefits. Security models of collaboration Payment systems should
With marked increases concerns must be kept top providing swifter time-to- be to a large degree
in digitally originated of mind, but SaaS options market, lower operating designed as an all-
payments, criminals have should be explored by all cost, shared subject inclusive eco-system
also turned their sights organizations. Likewise, matter expertise and incorporating as many
from traditional channels better integration of global experience can players of our daily needs
to the digital world. The payments and transaction offer Indian companies of as possible. For example,
emergence of malware data into Enterprise all stripes considerable enabling the end user to
targeting mobile devices Resource Planning (ERP) advantages. Cloud-based use a single mobile wallet
such as GMBot among and other systems hold services, managed IT from the start of his day
others is proving to be the potential to drive infrastructure and domain until he gets back home to
difficult to combat significant business expertise in the areas of make all payments with
without an investment in benefits at both a front payments industry the least friction possible
strong fraud detection and back office level. The standards, security and is going to be a critical
technology and controls. opening up of APIs by emerging tech such as IoT success factor in the
However, organizations financial service and blockchain future.

THE FORCES SHAPING THE PAYMENTS MARKET TODAY ARE NOW BEYOND
THE CONTROL OF ANY SINGLE ORGANIZATION (OR INDEED TECHNOLOGY).

Transactions 2025 11

12
SECURING

DIGITAL
PAYMENTS

THINKSTOCK
S THE WORLD GOES DIGITAL, cybersecurity is more
critical than ever. Over the last few years, there have
been cybersecurity attacks on industries that are giant
storehouses of customer and transaction information
such as e-commerce, healthcare, government
services, aviation and financial services. With the
proliferation of digital payments, cybersecurity will
be the greatest business risk. Users of digital
services access them primarily though mobile
devices.

In India, as part of the digitization push, cybersecurity challenge. Vast amounts of


the government has unveiled a series of consumer and citizen data will be stored
initiatives such as the Digital Locker, digitally and a large number of
which eliminates the need for people to transactions will be carried out online,
carry hard copies of documents issued by companies, individuals as well as
by the government. While the upsides government departments. That makes
are many, this also poses a big India a bigger target for cyber-criminals

»
and hack ers. Retail customers are lured
By 2025, it is likely that by unbelievable 'online
almost all transactions offers'. They are then
happen via mobile forced to download an
devices. Smart phones are app on their phones to
vulnerable to the same avail them. The malicious
Cyberattacks cost India an estimated
kind of security risks as app can then make $4 billion annually. The actual
computers. But the transactions without the numbers could be far higher because
problem with phones is users' knowledge. many relatively small incidents go
that they consumers tend
unreported.
not to protect them with A University of Florida
security tools as they do analysis of popular
with computers. There Android-based mobile
usually are several apps money apps in emerging
on a phone that are markets including India
'cracked' apps. The found pervasive and
cracked apps have access systemic vulnerabilities
to multiple sources of spanning botched
security concerns from a courts of law across the
information, including certification validation,
retail user perspective is world.
financially sensitive do-it-yourself
the lack of second factor Cyberattacks cost India
information-even one cryptography, and many
of authentication while an estimated $4 billion
time passwords (OTP) other forms of
transacting. This makes annually. The actual
across the device. The information leakage that
them vulnerable to numbers could be far
preponderance of open allow an attacker to
system-level breaches as higher because many
source mobile operating impersonate legitimate
transactions can be relatively small incidents
systems throw up higher users, modify transactions
system generated by a go unreported.
security risks. in flight, and steal
hacker without a
F raudsters usually hunt financial records. These
password. Thus, The losses are not just on
for vulnerable transaction findings are a reminder
technically, a hacker can account of stolen money
trails. In the financial that the majority of these
make thousands of or ransoms but
sector fraudsters use apps fail to provide the
fraudulent transactions operational disruptions,
identity theft and protections needed by
simultaneously. loss of sensitive
phishing to accomplish financial services. A
information, customer
their mission. But the thorough analysis of the
But the good news is that anger, legal fees and
means are now becoming service providers' terms
digital forensics is higher insurance
far more complex and of service by the
keeping pace with premiums. By 2025, the
sophisticated. Malware researchers revealed that
fraudsters and making life annual cost of
infections, anonymous the liability for these
difficult for them. The new cyberattacks could top
code executions from problems rests on the
digital tools can not only $20 billion.
remote locations, shoulders of the customer,
prevent the enactment of A big handicap in tackling
exploitation of Zero Day threatening to erode trust
frauds but also identify, cyberattacks is the lack of
vulnerabilities. In India, in branchless banking and
collect and store evidence awareness and the short
the most commonly used hinder efforts for global
of financial crimes in a shrift companies pay to
means are Trojan attacks financial inclusion. One
manner admissible in matters of digital security.
and spear phishing. of the biggest
Most companies treat
cybersecurity
Cyber criminals using
investments as
Trojan can hack into
expendable.
the email
Startups think
communications of
of it as
a client and a
something that
vendor. Having
merits attention
closely monitored the
only when they attain
flow of communication,
scale.
they impersonate the
Not paying
vendor and make
attention to
the client make a
cybersecurity
payment to their
today is simply
account.
not an option.

CYBER CRIMINALS USING TROJAN CAN HACK INTO THE EMAIL


COMMUNICATIONS OF A CLIENT AND A VENDOR

Transactions 2025 13

● 14

THINKSTOCK
GS Transact Technology Limited consumers in a meaningful way to give
them the expected customer experience?
(AGSTTL), one of India's leading YOUBANK empowers businesses to do
exactly that.
end-to-end payment solutions
provider partnered with ACI Fastlane is India's first and only contactless
fuel management and payment solution
Worldwide in 2016 to introduce that ensures you get the right Quality and
Quantity of fuel in your vehicle without
Universal Payments waiting in a Queue. Fastlane provides
Capabilities in India. automatic vehicle identification (AVI)
using RFID technology to deliver
paperless, cashless and cardless payment
This collaboration uniquely enables AGSTTL and ACI solution.
to collectively address a critical need impacting the
Indian financial services and retail markets to AGS Transact Technologies Limited along
develop a 'one-stop-shop' platform for payments, with its banking & technology partners
fraud and transaction management capabilities. powered India’s first and unique ticketing
Backed by ACI's global technology lineage, AGSTTL system introduced by Kochi Metro. This
offers a comprehensive multi-channel solution to Automatic Fare Collection System (AFC)
increasingly capex and time-to-market-conscious uses a combination of Open Loop Smart
banking and retail companies in India. Cards, RFID and QR Codes to collect fares
from the users and provides a hassle-free
Established in 2002, AGS Transact Technologies commuting experience. AGSTTL also
Limited (AGSTTL) is one of India's leading end-to- manages the operations for Electronic Toll
end payment solutions provider with a wide Collection (ETC) across National highways
spectrum of highly customized products instated on behalf of its partner banks.
with state-of-the-art technology for the Banking,
Retail, Petroleum and Transit sectors. AGSTTL AGS Transact Technologies Limited has been
operates across 2200 cities and towns reaching out powering India’s fierce retail environment
to over 2,00,000 customer touch points across India with its state-of-the-art payment &
and boasts of an impressive footprint in South East automation solutions. These hardware &
Asia. software solutions simplify complex
processes across retail outlets resulting in
From the house of AGSTTL, YOUBANK is a mobile an enhanced end-consumer experience.
platform that enriches the entire customer banking
experience like never before. With the convergence The revolutionary and CCoE certified
of mobile and Internet technologies, as well as the technology brings accountability and
quick adoption of mobile devices in everyday life, transparency to oil companies, fleet
customer behavior has evolved. owners and individuals and totally
wireless expertise brings significant cost
How would a business engage the new wave of savings.

»
Ongo is a leading alternate to support multiple channels and Flexible rules and alerting to more
transactions ecosystem offering a transaction types. This eliminates easily comply with evolving
wide spectrum of highly innovative the cost and complexity of government mandates.
and customizable fintech solutions maintaining duplicate functionality
for consumers, merchants, and information for each channel ACI's Proactive Risk Manager for
ecommerce and MSME’s alike. while providing a single point of Anti-Money Laundering is designed
integration to back-office legacy specifically to help you quickly and
Ongo mPoS devices - BP50 & BP systems. A powerful scripting effectively uncover and prevent
5000 are devices enabled with the engine can define application logic money laundering activities across
latest in payment technology to quickly respond to potential the enterprise. Its state-of-the-art
designed to accept all forms of fraud and risk threats (for example, analytics, expert rules engine and
digital payments including UPI, to introduce new authentication advanced neural network
Aadhar Pay & Bharat QR. The rules) without the need to modify technologies, together with its
devices also ensure seamless card source code, resulting in lower cost comprehensive workflow and alert
payment acceptance in-store & on- and faster time-to-market for new management, ensures you always
the- go from all the major credit & products and services. stay one step ahead of the criminals
debit cards brands including and your regulatory obligations.
MasterCard, Visa, RuPay and It helps ensure consistency of service
American Express. levels and information across Proactive Risk Manager for
consumer touch points. The fault- Enterprise Risk is designed
ACI Worldwide, the Universal tolerant application takes specifically for today's fast-paced
Payments (UP) company, powers advantage of the best in systems payments environment. It provides
electronic payments for more than software for reliability and the visibility and expertise you
4,600 organizations around the availability. need to uncover fraud quickly,
world. More than 1,000 of the reduce false positives and minimize
largest financial institutions and Retail Payments with BASE24-eps is losses, all while providing seamless
intermediaries as well as thousands available on premise or in a hosted customer experiences.
of global merchants rely on ACI to environment. ACI provides world-
execute $14 trillion each day in class hosted payment solutions and ●● Perform all fraud and AML
payments and securities. Through services to more than 4,600 monitoring - across all channels,
our comprehensive suite of organizations around the world to geographies and lines of business -
software solutions delivered on reduce time to market and minimize in real and near-real time to detect
customer’s premises or through technical, operational and business potential issues before they impact
ACI’s private cloud, we provide real- risk. Hosted services help avoid your customers or the bottom line.
time, immediate payments unnecessary up-front expenses
capabilities and enable the while freeing IT staff from day-to- ●● Proactively detect issues at
industry’s most complete omni- day operational tasks, so authorization or authentication,
channel payments experience. To institutions can concentrate on before fraud occurs, to protect real-
learn more about ACI, please visit innovations and strategic time payments.
www.aciworldwide.com/india. technology initiatives.
●● Profiles customer behavior to
Here's a look at some of ACI Proactive Risk Manager: This is a build a comprehensive relationship
transformational products that comprehensive enterprise level map, thus eliminating known
enable our clients to be part of the transaction monitoring and behavior from the risk processes.
digital payments revolution. detection solution to identify and
intervene in high-risk financial ●● Employ tailored workflows and
BASE24-eps: It is an integrated activity. It offers: comprehensive, centralized audit
software solution to acquire, trails to leverage staff expertise,
authenticate, route, switch and ●● Highly accurate detection via maximize resource efficiency and
authorize financial transactions analytics, expert rules and speed case resolution.
across multiple channels. behavior-based profiling across
It provides a full range of monetary and non-monetary ●● Alert users to potential issues
functionality to support electronic activities. via SMS, text, email or phone,
payment transactions. This includes enabling them to immediately
debit and credit at the ATM and ●● Efficient workflow management confirm or deny transactions and
point of sale, as well as branch and to ensure cases are improving overall
telephone banking, mobile managed quickly satisfaction.
commerce and internet banking, and effectively.
regardless of the payments
instrument used. ●●
BASE24-eps represents the next-
generation implementation of
ACI's world-class payments
platform. It's the culmination of
over three decades of
experience in developing and
supporting payments software,
leveraging the input of a global
customer base.
BASE24-eps improves the
cost-efficiency of payments
processing by allowing a
common set of
transaction services

FASTLANE IS INDIA'S FIRST AND ONLY CONTACTLESS FUEL MANAGEMENT AND


PAYMENT SOLUTION THAT ENSURES YOU GET THE RIGHT QUALITY AND QUANTITY
OF FUEL IN YOUR VEHICLE WITHOUT WAITING IN A QUEUE.

Transactions 2025 15
EXECUTIVE
SUMMARY

The near total digitization of payment transactions


is a certainty. Even in India, by 2025, cashless
transactions are estimated to be around 80% with
hard currency changing hands only once in every five
transactions people make.
By 2025, the volume of digital use services, the big policy push
transactions could be as high as towards financial inclusion, the
$1 trillion. Digitization and bring- desire to marginalize cash trans-
ing the heaving mass of unorgan- actions, and the explosion of
ized Indian businesses into the essential consumer solutions rang-
formal fold has been the corner- ing from e-commerce to app-
stone of the - current govern- based taxi hailing - all driving the
ment's policymaking around need for digital transactions - will
upgrading the country's payments propel India into a leading posi-
ecosystem. tion in the global payments land-
Its initiatives such as Jandhan scape.
Yojana, Aadhaar, introduction of The threat of data breaches
BHIM app and the emergence of alongside the surge in mobile pay-
UPI have driven financial inclusion ments has heightened the need for
across the country, and promise to a future-proof security system.
change the payment scenario in Major card networks have
India. Over the next decade the released technical standards for
global payments landscape will payment tokenization solutions,
evolve even faster due to mass which are poised to become
adoption of e-payments and inno- hygiene factors in any payments
vations introduced by new and service, and its adoption will soon
disruptive market players. India become imperative. ACI
will be at the forefront of this Worldwide, a leading global
payments transformation. The cur- provider of payment and fraud
rent payments ecosystem will also prevention solutions, advocates an
be redefined by regulatory all-in-one approach to payment
changes that will cover not only transactions that includes a fraud
the new disruptive services of screen for payments of any value
startups but also the evolving to protect both consumers and
service bouquet of traditional businesses from the costs of
players. In the near future, pay- nefarious transactions.
ment platforms will not just be
commoditized solutions but also
be cutting-edge platforms that will
deliver to changing lifestyles of
consumers. Demography, quan-
tum leaps in digital technology,
consumer demand for easier-to-

TRANSACTIONS
2025