imps merchant payments user group meeting dheeraj bhardwaj
TRANSCRIPT
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Interbank Mobile Payment Service
(IMPS)
Merchant Payments
User GroupMeeting
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Current merchant paymentsscenario
Remote payments
E-commerce
Face-to-face payments
Fixed POS
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E-commerce statistics
Growth of 47% to Rs 46,000 crores
Online travel industry contributes to 76% of totale-commerce
Financial services such as online insurancepayments and transactions through tradingaccounts 6%
Retailing on Internet 6%
Other online services (incl online classifieds) 5%
Digital downloads 2.4%
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POS statistics
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E-commerce usage
Barring few services such as online ticketing,Indian consumers arent shopping online. Largenumber of surfers use the Internet to look for
information about the product or service theywant to buy followed by a physical visit to a shopfor buying
E-payment preferred mode for electronic delivery
items Cash on delivery preferred mode for physical
delivery items
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POS usage
Credit card volume numbers are coming down on annualbasis
Debit card volume numbers are going up on annual basis
Number of debit cards is 12 times higher than number of
credit cards On an average, 15 transactions per credit card on annual
basis
On an average, 1 transaction per debit card on annual basis
Average transaction value for credit card transaction Rs2,800/-
Average transaction value for debit card transaction Rs1,600/-
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Electronic Payments are under-utilized
Indias retail market is worth US $ 450 billion(approx Rs 22.5 lakh crores)
Transaction value using credit/debit cards on
POS is Rs 114,206.33 crores, therebycredit/debit card transactions at POS accountsfor approx 5% of retail sales in India
5.5 lakh POS machines in India 15 million merchants in India, thereby approx
4% merchants have POS machines
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Reasons for under-utilization
Investment on POS machines
No of credit cards holders is approx 7% of all bankingcustomers
Pricing model serves as disincentive for merchants to
encourage payments by cards. Merchants discourageuse of cards for purchase of valuable goods and items
Customers use credit cards more because of creditfacility, debit cards is even more underutilized
7% account holders in India use net banking Customers reluctant to purchase online for security
reasons
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Advantages of IMPS
Number of mobile users is lot more. Mobile number can be linkedto bank account for everyone
Replacement of cash
Remote payments via website, IVR, mobile application
Fixed POS via virtual POS at retail counters
Mobile POS
No investment on POS machine for receiving payment via IMPS
Reducing the cost of issuing banks, as less cash withdrawal at ATMsand branches
Reducing cost for merchants, as efficient settlement, less risk offraud, process efficiency
Convenience, anytime, anywhere payments
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IMPS merchant payments PUSH transaction
Customer can initiate transaction through
mobile banking application and through SMS
facility provided by bank
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Transaction through SMSbanking
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Transaction through mobilebanking
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Transaction through mobilebanking
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Mobile top-up
Oxigen mobile number and MMID Payment reference Operator*Mobile number
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Mobile POS push transaction
Pizza delivery, courier, Cabs, retail POS
Customer enters the agents mobile number
and MMID, amount and payment reference
Agents mobile number and MMID linked with
merchants account at the back-end
Customer account debited and merchants
account credited
Customer and agent gets confirmation SMS
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Use cases
Insurance
DTH
Fee payments Credit card payments
Utility Bill payments
Over-the-counter payments
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IMPS merchant payments PULL transaction
Step 1 Generate OTP before transaction
Step 2 Make payment using OTP
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OTP validity
OTP can be generated through mobile banking applicationand through SMS facility provided by the Bank
OTP generation is 2-factor authentication process
Only one OTP is valid at a time
OTP valid for only one transaction successful or failure OTP is valid for 1 hour
OTP is 6-digit numeric
Transaction limit unlimited (subject to bank discretion) forOTP generated through mobile application, and Rs 5,000/-for OTP generated through SMS
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OTP generation through mobilebanking application
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OTP generation through SMS
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Make payment using OTP
Can make payment using OTP at merchant
application
Website
IVR
Mobile application
Mobile POS
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Make payment using OTP
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Mobile top-up
Customer provides OTP to the retailer Retailer prepaid balance is not debited. Oxigen account gets
credited. Retailer gets commission. Incentive for retailer to promoteIMPS
Services can be extended to DTH, railways, bill payments, bus
tickets, etc
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Mobile POS pull transaction
Agent has mobile POS application on the phone
Opens up form Receive payment from customer
Enters payment reference, amount
Asks customer to enter mobile number, MMIDand OTP
Agents mobile number (through which paymentis initiated) is linked with merchant account
Merchant account is credited and customeraccount is debited
Customer and agent get confirmation SMS
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Virtual POS
At cash counters in retail chains
Customer swipes card at the cash counter
Linked will billing system at cash counter Option to pay via IMPS
Customer enters mobile number, MMID, and
OTP Customer account is debited and retail chains
account is credited
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Mutual funds
Currently, in financial services, only Rs 2,000crores worth of transactions through onlinemethods
In mutual funds, no transactions throughcredit cards
Only debit cards and net banking methods
allowed Payment through distributors also possible
through distributor mobile POS method
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Insurance
Agent can collect payment via agent mobilePOS application. Credit directly into insurancecompany account
No investment on POS machines for insurancecompany
No need for agents to visit branch office to
submit cash, cheques Agents promote this method because of
above advantage
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E-Commerce company - Cash ondelivery
Cash on delivery preferred mode for physical delivery items
IMPS as replacement of cash on delivery
Customer places an order and opts to pay via IMPS on
delivery E-commerce company ties up with courier company
Courier company opens account with acquiring bank
The delivery agents mobile number is linked with courier
company Customer makes payment using delivery agents number
Payment is received in courier company account
SMS is received by customer as well as delivery agent
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Merchant business
Transaction fee from merchant per transaction
Deposits into merchant account with the Bank
Existing current account holders to be provided the facilityof receiving payments via IMPS, thereby widening
merchant network No investment of POS machines for making facility available
to merchants
As an issuer, less cash withdrawal at ATMs and branches,therefore lesser cost of transaction
Promotion on the ground through various channels Access channel (mobile) available widely
Fixed and mobile POS facility, payments anytime, anywhere
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Current status
Pilot launch with Union Bank of India and Kotak Mahindra Bank
Union Bank of India as Issuer and Kotak Mahindra as both Issuerand Acquirer
Kotak credit cards is pilot merchant for PUSH transaction
Times of Money is pilot merchant for PULL transaction
SBI development and testing completed, go-live in progress
Oxigen is pilot merchant for PUSH and PULL transaction
ICICI Bank certification in progress. Expected to go-live by middle ofFebruary
Canara Bank certification after SBI go-live. Expected to go-live by
middle of March Citi Bank, Axis Bank in development phase. Certification expected
to start by end february, and complete by 15th April
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Way forward
Let us know your interest in joining IMPSmerchant payments, and provide theimplementation plan
Finalize the vendor
Start the development
Certification process 6-7 weeks
One pilot merchant for PUSH and one for PULL
Currently 8 pilot banks under certification
Certification can be started after these 8 banks,and plan shall be shared