How QR, UPI And PoS Payments Have Changed The Scenario Of Indian Payment Modes In The Last 5 Years And The Journey Towards A Cashless India
Did you know that over one billion transactions happen in India every day, through cash or a digital platform? ONE BILLION. That’s a huge number. And for a nation that is looking to digitise, it’s a lot of potential customers to tap into.
The World Bank has been very vocal about the need for emerging economies like India to make the digital switch, for the purposes of hastening economic growth and ensuring financial empowerment on an individual level. There is better transparency and traceability of remittances through digital platforms, not to mention convenience. Plus, with ATM penetration in rural areas at a dismal 10 per one lakh people, digital wallets and payment options powers financial inclusion.
In the last 5 years – particularly since demonetisation – there has been a clear transformation in the way Indians transact with and access money, in both the urban and rural sectors. Mobile payments, wallets, debit card and smart card payments are on the rise, as is mobile penetration.
The government’s push towards a “digital India” has led to a noticeable shift to cashless transactions. A report from Boston Consulting Group and Google projected that digital payments in India will transactions worth $500 billion by 2020. Another report from Morgan Stanley states that digital payments have tripled in the last three years, accounting for 7% of the nation’s GDP.
The Rise And Rise Of Digital Payments In India
According to a report from McKinsey Global, Indian internet users will jump by 40% from now till 2023 while smartphone users will double in the same period. Digitisation and smartphone usage is creating a new kind of consumer and merchant: an increasingly 24×7, hyper-connected marketplace where consumers have on-the-go access to products, services, platforms and more, at the touch of a button. All this is leading to a rise in digital services and digital payments in India.
If the numbers are anything to go by, Indians are hungry for the internet: Indian mobile data users consume 8.3GB of data on an average each month, compared to 5.5 GB per month in China and 8-8.5 GB in South Korea. Indians have 1.2 billion mobile phone subscriptions and have downloaded more apps — 12.3 billion in 2018 than residents of any other country (except China). The average Indian social media user spends 17 hours on the platforms each week, more than users in the US and China. The report states that their analysis of 17 mature and emerging economies puts India at the forefront of digitisation, second only to Indonesia.
What’s driving this increased internet and data usage? It’s a combination of government and private sector players. While the government has helped digitise the economy, private sector firms like Reliance Jio have helped bring down data costs by 95% since 2013, making internet usage affordable and accessible to the masses.
Digitisation also happens to be a two-way street and in many ways, is being driven by payment providers and merchants. As per a BCG-Google report, digital payments give merchants access to data (which is king in today’s economy). This enables payment service providers (PSPs) to offer mine this data and offer personalized products, services, deals and discounts at the right time to directly impact consumer purchase decisions and boost sales.
QR, UPI and PoS: An Overview
PoS devices are used by local merchants and small business owners to process credit and debit card payments. There are close to 5 million PoS devices operational across India at present, with 3.7 million of those (close to 70%) deployed by banks.
Statistics from the RBI show that there were 1.3 million operational devices as of February 2016, which rose to 63% within a year to 2.2 million, driven by an increase in digital transactions post demonetisation. However, since then, deployment has slowed, to 38% in February 2018 and 18% in 2019. One reason for this decline is the adoption of UPI and QR payment modes, which allow for a completely contactless payment experience.
Thanks to scan and pay methods like PayTM and Bharat QR, merchants can display their QR codes at the counter, which customers can scan, making an instant payment. The payment goes directly from one account to the other with real-time notifications – and there’s no need to share account or personal details.
UPI is a mobile-based real-time payment platform that allows users to pay or collect funds between two different bank accounts. Users can make peer-to-peer and peer-to-merchant payments directly from their accounts without the hassle of typing card details or keying in a bank app or password. All users need to do is download any UPI app from the Google Play or App Store (there are over a hundred available) and log in using the mobile number registered with the bank. After registering the device and linking a bank account, all that’s left to do is set up a UPI pin, which will be used to authenticate transactions.
Here are a few reasons why UPI and QR are becoming a preferred choice for merchants and consumers:
- Easy linking of multiple bank accounts on a single app
Since 2017, the National Payments Payments Corporation Of India (NCPI) has introduced two QR code standards – UPI QR and Bharat QR. Bharat QR works exclusively with banking applications while UPI QR can receive payments from a number of different third-party apps as well as cards. While exact numbers are not available, payment providers say that there has been an increase in payments through these two QR code options.
In a statement to Bloomberg Quint, the head of offline business development at PhonePe said that around 60% of the apps 9 million merchants actively use QR codes at their stores.
It’s easy to see that both merchants and consumers have found their groove with cashless transactions – but are these three payments options – PoS, UPI and QR – the only ones the market is adapting to or is their scope for further innovation?
What Next For A Digital India?
Apart from QR, UPI and PoS payments, there are other digital and contactless technologies that are likely to gain traction in the years to come. We have outlined some below.
- Tap and go: Also known as contactless cards, many Indian PoS devices are already equipped to handle these chip cards. These debit and credit cards use a combination of EMV chips along with a contactless chip and RFID antenna. and Tap and go is much quicker and more secure than swiping or inserting the card, and does away with the time-consuming steps of entering a pin code and waiting for authorization.
- Biometric: Biometric technology is even more convenient, doing away with the need for passwords and pins. It’s not just that- touch-powered biometrics also come with the benefits of accuracy, speed and ease. The only downside, however, is having to procure the infrastructure for it.
- Facial recognition: Most contactless payment technologies rely on a smartphone, but facial recognition will do away with that altogether. The customer just needs to stand in front of a PoS device that has facial recognition technology and equipped with a camera. The camera captures the image of the customer and the payment is transferred. It’s quick, secure and offers little room for hiccups. Aadhar has already incorporated face and iris recognition, so it may only be a matter of time before Indian payment companies adopt facial recognition.
- Voice Payments: Thanks to the success of Alexa and Siri, fintech companies have caught on to the next big thing for payments: voice payments. Amazon Pay, Google Pay and Apple Pay are already in the process of adopting it, and it could very well trickle down to local payment companies. Again, voice payments ensure a seamless, cashless and pin-free shopping experience, something that’s always welcome for consumers.
It’s clear that digital payments are way forward – and you, as a merchant, need to be ready to adapt by accepting various forms of cashless payments.
Paytrac: Empowering A Digital India
With smartphone usage and digital payments on the rise, merchants need to be able to track their payments quickly and effectively. Paytrac is the ideal solution.
Paytrac is India’s number one payment tracking and order management app, that tracks all your payments coming in from UPI, wallet, QR, PoS and online bank transfers. The app automatically scans and tracks incoming and outgoing transactions from all these modes so that you can stay on top of all your spends. (In the case of cash transactions, if any, there is an option for manual entry, by adding “cash in” or “cash out”, the amount, and the name and number of the person the payment is related to.) Paytrac also has a smart audio notification feature. Go to the app, switch on audio notifications in the language of your choice, and receive alerts every time an amount is credited to your account. This ensures that you don’t miss a payment, even when you are busy with other tasks.
Paytrac doesn’t just track payments – it also shares insights and data about your business with the help of an interactive dashboard. View your daily, weekly and monthly settlements and get a glimpse of how your business has performed over a 28-day period. You can also filter and review payments by mode so that you can get an idea of which payment modes are bringing in more revenue.
Apart from payment tracking, the app allows you to stay connected to your customers with a broadcast feature, that lets you send messages to your entire customer base at the click of a button. Compose a new message or choose from an existing message template. Once you’re done, send it to your customers via WhatsApp, Telegram, Facebook Messenger or SMS. Let your customers know about shop timings, deals, discounts, new stock arrivals and much more!
But that’s not all – Paytrac also doubles up as an order management tool as well. Customers can send in their orders and shopping lists via WhatsApp – Paytrac will automatically scan and capture it. Then, you can upload and edit it in the orders section and generate a manual receipt for your customers!
Digital India is the new India – and people are opting for contactless and seamless shopping experiences from their devices. Paytrac helps you streamline your business – why not install it today and see how it can make a difference!