The possibility of merchants overseeing the pin number while customers punch them makes people jittery.
Business Line spoke to First Data, one of the largest payment solution providers in India, to ascertain the safety aspect and card penetration.
The US-headquartered First Data is in a joint venture with ICICI Merchant Services, a subsidiary of ICICI Bank, to provide card issuing services to corporates, financial institutions and card acceptance services in India.
“The shift from cash to card is here to stay. We process one in three card transactions in the market,” said Nitish Asthana, Executive Director, First Data.
Excerpts:
How safe are electronic transactions in India?
The agenda to make card transactions more secure includes those for Internet and physical PoS (point of sales) transactions. Every Internet transaction requires a 3D security that protects Internet payments. Cross border transactions over the Internet continue to happen without a PIN in several countries, according to their laws and standards. The recent RBI move to make debit card transactions with PIN is significant. Overtime, credit card transactions will switch from signature based to PIN. In 24-36 months, it will probably be an entirely PIN-based market.
The EMV (Europay, MasterCard and Visa, a global standard for processing card transactions) standards of PIN entry along with the chip card offer a high level of security.
How far are we from biometric authentication of transactions?
Transactions authenticated by biometrics linked to the Aadhaar number would be a good move in the long run. It’s akin to fitting a car with both petrol and electric engines. The cost will be high and there may not be too many transactions to process in the short run. Banks are still in the process of considering it. This is something that needs to evolve, be tested and then deployed fully.
What is the impact of the economic slowdown on your business?
Regardless of the overall state of the economy, the shift from cash to card is sure to grow. Electronic payments have grown 30 per cent year-on-year over the last two years. It is clearly the convenience and the value that people see in paying by card. Still, there is a significant cash economy. Out of 12 million merchant outlets in India, only about a million accept cards. So there is a big task at hand.
What about your rural reach?
The level of adoption by merchants and the demand from people to pay by card is on the rise in smaller cities. We aim to increase our PoS installations from one million to five million over the next five years. The big piece to figure here is the debit card population. Credit card is a phenomenon that is concentrated more in the top-10 cities, and that is only a population of about 20 million people.
India has 380-400 million people on debit cards today, growing significantly month on month. The story that we see unfolding in the tier-II and -III cities is debit cards being used increasingly and merchants eager to accept debit cards.
What are the growth drivers?
There are two significant changes taken by the RBI to promote debit card usage. One is the reduction in the merchant discount rates in debit cards capped at 0.75 per cent and one per cent, depending on the transaction size. This reduces the merchants’ cost. The second is to make PIN a must for all debit card transactions. People who were traditionally spending in cash will start using debit cards.
What about the cost of deployment?
This is going to be very crucial as we try to rope in more merchants to electronic payments. At present, the cost is on the high side. There are some interesting solutions that the industry and we are working on.
We are keen to deploy card acceptance on the mobile phone. We want to bring in mobile PoS with EMV-based solutions.
The cost of the equipment would be lower compared to a normal device. Those are the opportunities that we see.
How does the mobile solution work?
Just like a PoS terminal where we swipe cards, a device connects the mobile phone via a bluetooth or the audio jack and that device is movable. You can then start accepting payments on the go. You do not need a fixed device or terminal connected to a phone line. This device can power transactions even outside the shop.
It will open up several opportunities for card payments such as pizza delivery or an insurance agent going from door-to-door to accept payments, or e-commerce firms delivering goods at the doorstep and accepting cards on delivery. The payment application is on the mobile phone. So, it lowers the device cost and it is extremely safe for consumers. Evolution of mobile PoS is in the early stage.
We feel that this solution can boost card transactions and enhance reach, as it will be very relevant for smaller merchants for whom the number of transactions is not very high.
What will be cost saving with the use of mobile tech?
Compared to a normal PoS device, there can be 30-40 per cent saving. Having said that, I think this is something directional, and it will take some time for the price to come down as volumes increase. On an average, a wired PoS device excluding infrastructure, costs about $100-150.
If it is a GPRS or a wireless device, it would be about $200-250. The mobile PoS should cost between $100 and $200 per device. Unlike a GPRS device, the mobile POS is a small device that pairs with the mobile phone.
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Autor(en)/Author(s): Suresh P. Iyengar
Quelle/Source: The Hindu Business Line, 25.12.2013
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