In­dia has the most evolved pay­ment in­dus­try, re­veals Global FIS study

Banking Frontiers - - Research Report -

Are­cent pay­ments study from FIS re­vealed that the num­bers of coun­tries of­fer­ing faster pay­ments is grow­ing and the whole na­ture of pay­ment sys­tem is evolv­ing. The study also high­lighted In­dia, as the most evolved pay­ment in­dus­try amongst the 25 coun­tries sur­veyed.

FIS’ fourth edi­tion of the Fla­vors of Fast sur­vey stud­ied the NPCI’s Im­me­di­ate Pay­ment Ser­vice (IMPS) which makes use of a cen­tral­ized iden­ti­fi­ca­tion scheme where aliases can be used as an al­ter­na­tive to bank ac­count num­bers to sim­plify the trans­ac­tion ex­pe­ri­ence. Along with IMPS, the study also re­vealed the use of Uni­fied Pay­ments In­ter­face (UPI) which is a com­bi­na­tion of real time pay­ments with open in­ter­faces with an in­ten­tion to re­place cash, POS and wal­lets.

“Real-time pay­ments are not only about speed. They’re about cre­at­ing fric­tion­less trade, and a fi­nan­cial world in which the en­tire pay­ment process oc­curs eas­ily and im­me­di­ately,” said Ra­maswamy Venkat­acha­lam, Re­gional Man­ag­ing Di­rec­tor – South Asia, FIS. “The Gov­ern­ment of In­dia has pro­vided a num­ber of in­cen­tives for real times pay­ments as it looks to add more users through a com­pletely seam­less pay­ment mech­a­nism.”

The study en­cap­su­lates the progress of pay­ment mech­a­nisms of 25 coun­tries around the world. With mere fo­cus and com­par­i­son be­tween the Brazil, In­dia, China, Kenya and South Africa, it was ob­served that In­dia has made great steps by of­fer­ing in­no­va­tive so­lu­tions in the pay­ments space.

In­dia’s IMPS is truly the god­fa­ther of faster pay­ments schemes. It of­fers an in­stant pay­ment ser­vice for on­line and mo­bile de­vices, avail­able 24x7, that pro­vides a safe and eco­nom­i­cal ser­vice for con­sumers and mer­chants to make and re­quest pay­ments. It is now in its sev­enth year of op­er­a­tion, and con­tin­ual evo­lu­tion has en­sured it re­mains a lead­ing ser­vice.

Like­wise, the In­ter­net Bank­ing Pay­ment Sys­tem (IBPS) of­fered by China con­nects the on­line bank­ing sys­tems of the var­i­ous com­mer­cial banks. Pay­ments be­tween banks can be re­ceived in near real time, with ac­knowl­edg­ments within 20 sec­onds. Over re­cent years, the use of IBPS has sky­rock­eted with a growth of over 50% in vol­ume and 35% in value.

SITRAF, a Funds Trans­fer Sys­tem by Brazil uses two mech­a­nisms of set­tle­ment: Real-time gross set­tle­ment (RTGS), which is the most used, and con­tin­u­ous clear­ing of obli­ga­tions.

South Africa’s RTC sys­tem (Real Time Clear­ance) en­ables on­line real-time credit push pay­ments al­low­ing ben­e­fi­cia­ries to re­ceive avail­able funds in their ac­counts im­me­di­ately. RTC has seen strong growth with peo­ple con­sis­tently trans­act­ing more often and in larger value. Be­tween 2015 and 2016 the daily vol­ume grew by 25%, with the value be­ing trans­mit­ted in­creas­ing more than 28%.

Kenya is one of the newer mem­bers of the faster pay­ments fam­ily with their Pe­saLink ser­vice launched in Fe­bru­ary 2017. With over 2 mil­lion sub­scribers in the first 3 months of launch, the pri­mary goals of the ser­vice has been to aid fi­nan­cial in­clu­sion through lower switch­ing fees by of­fer­ing cus­tomers a low price and a con­ve­nient pay­ment mech­a­nism that brings more of the un­der­banked pop­u­la­tion into the fi­nan­cial main­stream.

As In­dia ac­cel­er­ates its jour­ney to­wards dig­i­tal pay­ments and less cash econ­omy, pro­vid­ing ac­cess to real time pay­ment ser­vices, bet­ter than other global sys­tems, is fa­vor­able for the health of the coun­try.

The pay­ments mar­ket is awash with chal­lengers and dis­rupters that are threat­en­ing the busi­ness model of bank­ing and the pay­ments that un­der­pin the busi­ness. To suc­ceed and re­main rel­e­vant, in­stant pay­ments must be used as an en­abler. Im­me­di­ate pay­ments will al­low banks to em­brace the new open en­vi­ron­ment that will form the ba­sis of bank­ing go­ing for­ward. This will help the banks to cre­ate real busi­ness value by match­ing the needs of mer­chants and their cus­tomers.

For the full re­port visit https://www.fis­­vors-of-fast-2017

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