“Expect More,Pay Less” : Payment Solutions in India

panel 6- Expect More The session “Expect more, Pay Less”: Payment Solutions in India was moderated by Meheriar Patel, CTO & Head, eCommerce, Globus Stores Pvt Ltd. The eminent panelists were Deepa M. Thomas, eCommerce Evangelist, eBay India; Ashish Hemrajani, Founder & CEO, Bigtree Entertainment Pvt. Ltd.; Pramod Jajoo, CTO, BigBasket.com; Dewang Neralla, Director & CEO, Atom Technologies and Naveen Surya, MD, ItzCash Card Limited.

“Three statements define us:  “Jugaad”, “Cash is King;” and   “Sasta, Sundar, Tikau” – Dewang kicked off the panel discussion on Payment Solutions in India at ReTechCon 2013.

 What technology is doing in payment solutions:

Naveen Surya, MD, ItzCash Card Limited : “Technology removes friction and reduces counterparty risk to enable the non-cash portion of the economy to grow.”

“In India cash is still king. 90% of all monetary transactions in India are cash.” “Payment solutions enable those who don’t have a debit / credit card – which is 80% of the population in India.  This includes 16 to 20 year olds in urban centers, who may not have independent credit cards or bank accounts. The first generation payment solution was the digital wallet – as a customer, you went to a bank filled out a form and were able to access you money digitally.  This was not unlike a debit card, but you didn’t need a bank account; and you got access to your money through an ATM. “

Payment solutions for the mobile market:

Deepa – e-bay evangelist – “India is a market of mobile “firsts” – we’ve adopted smart phones faster than other markets. 68 mio Indians visit online shopping sites but only 9 mio  are buying so there is a lot of potential. Mobile is mostly being used for  ‘showrooming’ right now.”

“Some options in the market are for example what is used by ebay – the platform is called “paisapay”. It functions like an escrow i.e. merchant gets payment only after the consumer gets the product.  To give you a sense of how fast the market has adopted  – in 2004, 15% of our transactions on ebay were online via paisapay – today, in 2013 its 95%.”

Ashish Hemrajani, Founder & CEO, Bigtree Entertainment Pvt. Ltd.;   “Bookmyshow is 14 years old. We’ve gone through the dot-com bust, scaled down and then scaled up.  As a merchant, we go where the consumer is – it’s as simple as that”

“Till 2002 – 99% of transactions from the call center. No debit / credit card penetration. We were a call center and delivery company.  Even in those days, with payment systems being rudimentary at best, we could still profile and tell a lot about consumer behavior. For example – there was a customer in Delhi – who would have tickets for family style entertainer movies delivered to an address which was different from the one given when wanted to view “adult” entertainment – a clear “tell” that he was – shall we say “a colorful personality”. Today 17% of all our transactions are via the mobile, and more than 70% are on the web. We are integrated with 32 payment gateways – we are agnostic to the solution provider. When transactions with one gateway taper off or fall,  we auto-switch and load balance.

Biggest issue faced for the large scale adoption of payment solutions

 Naveen Surya, MD, ItzCash Card Limited : “Failure rates on payments through gateways @ 25 to 30%. For Credit cards its about 9% and with net-banking its about 15%.”

As a merchant, what is the biggest requirement from payment solutions

Ashish Hemrajani, Founder & CEO, Bigtree Entertainment Pvt. Ltd.;   We want one-click payments. The time-gap between the consumer thinking about something to the time its delivered to him should be minimalistic.

The main reason for payment failures is usually – server to server. In other words, unstable data connections – between the user and the payment gateway lead to dropped transactions.

Pramod Jajoo, CTO, BigBasket.com: “Payment security is still the biggest issue in the mind of the customer – about 65% of our transactions continue to be Cash on Delivery.”

Role of regulations

The panel felt that the Reserve Bank of India has played a catalyst’s role in upgrading the payment infrastructure in the country (from ECS to NEFT to RTGS platforms) – given the many complexities of geography, Telecom density, telephony etc.  Fraud rates have come down significantly (especially in international credit card transactions) in the last 10 years – and the customer does not have a problem with trusting online-payment mechanisms. This is in contrast to several other emerging markets (e.g. Russia, Brazil) where adoption has been hampered by customer concerns around security.

“We are one of the last markets to adopt chip and pin – this is an area where a regulatory push could help.  POS devices will morph only where there is customer adoption. The fastest way to consumer adoption is through regulation”.

How should a merchant approach this space?

“Merchants should focus on what they do best – supply.  “That’s where marketplaces can play a role; as they can be leveraged for traffic and logistics. “ – Deepa (E-bay ecommerce evanlegist)

“Merchants should be spending their time strategizing on how to better the shopping experience, their merchandise mix, how to increase sales, how to create loyalty, what social media strategy to use – they should not have to worry about payment solutions”.

Alternative payment platforms – are they good?

The panel felt that, from a long term, structural perspective, alternative payment platforms were not healthy.  In other markets, some of these platforms have been associated with less than positive press – e.g. money laundering / terrorism connections.

“It’s not alternative payment platforms that are needed – it’s inclusive platforms which can cover as many payments modes as possible and as much of the population as possible”.

Audience question:  Interchange rates – are they optimal?

Ashish Hemrajani, Founder & CEO, Bigtree Entertainment Pvt. Ltd.;   “Of course, as a merchant I would like interchange rates to soften. From a consumer adoption perspective, the lower the interchange rates the more the choice to the customer in terms of the entry of additional payment solutions providers. In the credit card space – there are only 2 major players (Master / Visa) – and the issue is not about whether the rates are high or low – the issue is that the rates are different for online versus offline transactions. This difference (1% for offline versus 4% for online transactions) is substantial.  In the debit card space, the RBI stepped in and set the rates – it is not optimal for a Regulator to step in and set rates – especially if you want to encourage large scale adoption and move away from a cash based transactional economy”.


Dewang Neralla, Director & CEO, atom technologies:  “Structurally speaking, over time, the market should move to an acquirer centric model. In the past rates were based on an “issuer centric” model – but again, from the perspective of creating scale – it’s a move that should take place.”


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