Worldline, a leading player in the digital payments and transaction services space, is bullish on the Indian market. This is the fastest growing market among all the geographies they operate in — although the Indian market still lags behind in volumes substantially. Christophe Duquenne, Chief Technology Officer, Worldline, and Deepak Chandnani, CEO, South Asia and Middle East, expect a three-fold rise in volumes in the payments and transactions services space within the next five years on the back of rising digitisation. Although global economies are expected to grow by a modest 3 per cent this year, digitisation trends point to a quantum leap in business volumes for payment services. Edited excerpts:
How is Worldline’s electronics payments business affected by the global economic slowdown?
There are some countries that are providing incentives to completely banish cash. Cash is costly. It is risky. For governments, it is also a source of loss of VAT (value added tax).
Is it possible to move to a totally cashless society? How do you incentivise the grocer who doesn’t want to come into the tax net?
Deepak : It is a difficult exercise. There have been a number of studies that show that the cost of cash for the retailer is 1-2 per cent. There is a cost of holding cash — he has to keep it idle, he has to send it to a bank for which he gets credit later, he has to insure his people, he has to insure his premises.
He is often not aware of this and the associated costs. Compared to that, what he pays for a swipe transaction is no different.
But the crucial thing is to make the consumer say that ‘I will use my card, wallet or electronic payment’. We, as consumers, are the culprits because we won’t leave our houses without cash even if we have 10 cards or wallets on our phone.
How quick has India been able to adapt to digital payments compared with other countries?
Christophe : The pace at which new products are created and launched into the market here is impressive. For instance, having 50 mobile wallets in India created over the last 12-18 months is very impressive. We don’t see that in other geographies.
But there is a huge challenge in India due to size. It takes a long time to equip such a large country. There is a lot of room for expansion. Less than 10 per cent of payments are through electronic channels. But we have seen that growing very fast in recent years.
And conditions have improved — with Aaadhar, growth of smart phones and e-KYC to expand faster. We expect a three-fold growth within the next five years.
So, that is moving from 650 million cards to nearly two billion cards by 2020. Of course, usage will also grow.
Deepak : Today, there are 15 million merchants in India. Less than a million of them have a PoS (point of sale) terminal. While a lot is said about e-commerce, it is still a small portion of the pie. There is plenty of room for us to grow.
Compared to China or Europe, we are way behind in terminalisation of merchants. The good thing is we are growing. Both e-com and terminal sales are growing. There should be more cards out there.
The PMJDY (Pradhan Mantri Jan Dhan Yojana) has brought in 180 million debit cards. Aadhaar now enables e-KYC. And you have to reach these people, which is where phones help. Some 75 per cent of Indians have phones. Banks are now trying to provide them payment instruments — and we are building an ecosystem.
Today, the number of transactions happening through wallets is more than those happening through cards. Cards have been here for four decades. Wallets came here just a few years ago. The size of transaction is, of course, much smaller.
The average size of credit card transaction is ₹3,000, while it is about ₹350 for wallets. The transactions are more through wallets. We don’t see this kind of rapid adoption elsewhere.