Mobile Commerce

What the Payments Industry Can Learn From India


India is still a cash centric society with few credit cards and only a third of its population owning a debit product. Yet, Srinivas Nidugondi, Head of Mobile Financial Solutions at Mahindra Comviva, says the rest of the world can learn a lot about payments from this emerging payments market. Since mobile is leapfrogging traditional payments technologies there, there’s a lot that we can learn from seeing how consumers use mobile to pay, be paid and otherwise conduct their payments and financial activities.


What are your views on the overall mobile payments market in India?

SN: India is a very fascinating market in the context of mobile payments for two reasons. One, the overall payments market is pretty much a cashless one. Secondly, India is a multiplex of multiple worlds – consumers and businesses, as well as the under-banked and unbanked society that uses cash to transact and do not have access to organized financial services. These two diverse market segments make for a big opportunity for the electronic payments market in India.

But with mobile leapfrogging technology coming in the last decade and a half, suddenly there’s a huge opportunity arriving to address the needs of both of these segments. We’re seeing a huge revolution that’s taking place in the country. If we look at the first segment, the evolved consumer who is banked, we have seen them take to the mobile medium, including more social media-involved transactions and bank transactions over the phone. Mobile is penetrating the lives of Indians, enhancing the user experience and making their lives simpler. In the same context, those who previously have done internet banking on computers are doing it on mobile devices.

Regulators have actually provided guidelines to boost the adoption of mobile payments, not just in the context of existing bank consumers, but also to enable the unbanked and under-banked segments to come into the financial mainstream. Financial inclusion has been a big challenge, and mobile has made it much easier.

The overall growth for both of these segments seems to have reached the next level, and I believe we will see an inflection point in the next 2-3 years.


First Data recently partnered with Mahindra Comviva to deliver a sophisticated mPOS system in India. How was this partnership formed and what added value does this deliver?

SN: The challenge in India has been, due to the credit score issues, the penetration of cards took awhile. So what all banks and regulators have gone in the direction of debit cards – today the number of debit cards in India is around 420 million. So suddenly, most have a physical plastic card – but what they really do with these cards is take out cash at an ATM to pay for goods and services. This is because there are only 1 million merchants in India that accept cards.

The other interesting thing we’re seeing is that the e-commerce market in India is booming. However, unfortunately, the culture is such that people still want to touch and feel products before making the payment. Cash on delivery is therefore still predominant in the country.

E-commerce giants and insurance companies did not previously have a way of accepting anything but cash, and the cost of installing and maintaining these POS terminals was expensive and complicated. So what players in the market found was that large and medium merchants, and the mom and pop shops, need to have the ability to accept these card payments. That’s where mobility solutions came into play in the market, and we’ve seen a huge shift in how people are paying. In the next 2-3 years, we expect the 1 million merchants that accept cards to increase to 2.5-3 million driven by the mobile commerce market.

This is where we think we have an edge over those who only process or enable payments. We partner with players like First Data and bring with us an understanding of how mobile payments allows both companies to partner to come up with the right solution for the industry.


With security breaches becoming the norm, what protection does Mahindra Comviva’s payPLUS offer to help keep consumer data safe?

SN: Everyday we hear about security breaches, and it’s not a matter to be taken lightly at all. So with Mahindra Comviva, we’re focused on the security aspects of the solution. Security really has two sides – one is the technology implemented, and two is the processes that govern the solution. We look at both of these aspects to come up with the right security elements. The dongle that we use is fully encrypted, so when data comes in after the card is entered into the dongle, it is encrypted within the hardware, and the information is stored in characters that are useless to a fraudster.

The other aspect of a secure solution is that it must meet PCI standards – we have to be sure that we understand what security controls need to be in place. Whenever a solution is designed, we work with customers to go through each step to eliminate any flaw through which someone could find a loophole in the process. Finally, the people need to also play a part in ensuring they are making the best decisions to protect them. As long as the technology, processes, and people cover all necessary security aspects, the protection will be robust and ahead of loopholes that may form in the future.


What are your future plans for expansion in markets such as the Americas and Europe? 

SN: We’re working some of the best companies in the world, such as First Data, so we really understand the marketplace. India also offers that mix of marketplaces that I mentioned earlier, so we understand the requirements of a consumer who uses digital channels and cards as well as the merchants who are offering these solutions. As we speak to players from Europe to Asia, Africa, and Australia, we are seeing that requirements of the market are quite similar to those in India. The fact that our solution has been built for a very evolved country like India gives us the ability to replicate it for markets across the globe.

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