With rapid increase in mobile device usage, m-payments are expected to lead the retail industry. Retailers are heavily investing in making in-store experience frictionless, time-saving, and one that offers convenience to their customers while making payments. A few months ago, during cash crunch post-demonetisation, a major impact on retail stores was decline in business as they were not able to accept electronic payments. However, it is a myth that e-payments can be accepted only if full-fledged point-of-sale (PoS) machines, where credit and debit cards can be swiped, are available. While PoS is the most evolved form of payment acceptance, there are newer forms available in India.
Traditional PoS: These are suitable for stores that have good volumes which can justify the cost of PoS machine. Banks are the front-runners in the business of acquiring merchants using such devices. These devices support many forms of payments—card swipe, contactless, Aadhaar-based, QR-code-based, etc.
Mobile PoS: It is the mini version of traditional PoS which pairs with the mobile phone of the retailer. The UI (in the form of a mobile app) and connectivity of the mobile phone is utilised and the mobile PoS device is used for swiping the card and entering the PIN. It’s suitable mainly for a mid-size retailer set-up, and especially for home delivery and payment on delivery. Apart from banks, this business is driven by private fintech players, who specialise in acquiring merchants on mobile PoS.
Digital PoS: A mobile app used to initiate payment transactions, it is suitable for set-ups with low volumes. It can also be complemented with one of the above two PoS services where remote payments are accepted. Take home delivery, where the person making the e-payment is not at home. In such cases, the digital PoS is used to initiate the payment request, which goes to the payer’s mobile device in form of an email or SMS payment link. The payer clicks the link and makes the payment with the preferred option. Banks, mobile PoS players and fintech companies have ventured into this space, given the non-dependency of hardware devices in these cases which brings down customer acquisition cost significantly.
QR-code-based: The retail store puts up a QR code—Quick Response code—at the outlet. The code can be dynamically generated with any of the devices available with the retailer using an appropriate app. The QR code is nothing but a merchant identifier, and in case of dynamic QR code it embeds the payment amount and/or description. The buyer needs to scan the QR code app using an appropriate payment app on their mobile (respective mobile wallet, mobile banking app of their bank, BHIM, etc). The app will be determined by the entity that has installed the QR code. Bharat QR is the interoperable QR code that can be used to make payment over RuPay, Visa or MasterCard networks using bank-issued mobile payment applications. Rest all QR code options are mostly closed-loop in nature. Banks, private fintech players and respective wallet operators acquire retailers and provide them QR-based payment acceptance option.
Depending upon the size and nature of the business of the retailer, a combination of one or more PoS/QR options can be subscribed by the retailer to accept a wide variety of e-payments. According to a recent RBI report, debit card swipes at ATMs have dropped to 655 million transactions in May 2017 as compared to 800 million transactions in October 2016. Simultaneously, debit card usage at PoS terminals has risen by 90% since demonetisation, where transactions jumped to 267.5 million in May 2017 as compared to 140.4 million in October 2016.
With the growing acceptance of digital payments, coordinated efforts towards making them secure are also needed. India is ranked 23rd out of 165 nations in a global index released by the UN agency ITU that measures the commitment of nations to cybersecurity. Even though India is ahead of some countries like China and Germany, there’s a long way to go.