India has the most evolved payment industry, reveals Global FIS study
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.fisglobal.com/flavors-of-fast-2017