By Varun Rathi, COO & Co-Founder, Happay
Headquartered in Bengaluru, Happay is India's leading fin-tech start-up that offers expense management solution for companies. The company’s core vision is to provide end-to-end payment solution for corporates in simple, fast and secured way.
2015 is the year that took world of payments by a storm & was rightly termed as a year for Financial Technology & we cannot agree more. Fin-tech industry is the traction has only become stronger in 2016. The companies have used innovative measures to fill the long existing gaps in terms of customer experience which were long due. We now have a fin-tech company for every kind of financial needs. 2016 also marks as a year where card payments have overtaken the cash payments. 2015 is the year that took world of payments by a storm & was rightly termed as a year for Financial Technology & we cannot agree more. Fin-tech industry is the traction has only become stronger in 2016. The companies have used innovative measures to fill the long existing gaps in terms of customer experience which were long due. We now have a fin-tech company for every kind of financial needs.
2016 also marks as a year where card payments have overtaken the cash payments.
2017 will see two major alternate payment channels:
- Strengthening of RTP.
- Introduction of Block-chain
- Evolution of Remittances
- Companies providing contactless payments will see a steep rise in the acceptability ratio which may give substantial nudge to NFC
- Mobile acceptability to rise further & there will be introduction of newer payment methods by the OS providers
Blockchain: The rise of plastic, mobile wallets have also given a way to the newer forms of payments. Things 2016 will be remembered for:
• The upsurge in card based payments
• Global increase in non-cash transactions
• Introduction of alternate wallet based payments: specialized mobile solutions are gaining traction because of increase in smartphone penetration
Any company which provides end to end customer experience while maintaining simplicity, security & providing value add would emerge as a winner.
The force behind FinTech:
• Adoption of the newer platforms will be faster.
• Remittance will see a healthy growth in the next financial year which might reduce the remittance fee.
• UPI will strengthen the hold of RTP & it will offer standardization & efficiency gains.
• Startups operating in Fin-tech segment have seen a steady flow of funds since last couple of years & this is likely to continue.
• Consumer will be benefitted the most as the competition will bring out the best in all the companies & the price for the services would reduce.
• Banks would also buckle up & the need of innovation will be at all-time high. Open API’s will give a much essential nudge for the new leap of growth, This would help retail, e-com players to accept payments & disburse loan directly, efficiently & at an never seen before pace.
• The Indian FinTech software market is forecasted to touch $2.4 billion by 2020 from a current $1.2 billion, as per NASSCOM.
• The transaction value for the Indian fin-tech sector is estimated to be approximately $33 billion in 2016 and is forecasted to reach $73 billion in 2020 growing at a five-year CAGR of 22 per cent.
• The Indian payments sector is in the midst of rapid innovation, propelled by changing consumer patterns and initiatives taken by regulatory and banking institutions. This has been supplemented by large scale adoption of mobile payments. The mobile payment industry in India is valued at about$ 1.15 billion in 2016, growing from $86 million in 2011, clocking at CAGR of 68 per cent. Additionally, the mobile wallet industry is poised to reach $183 million by 2019.
• Furthermore, start-ups are coming up with innovative technologies to provide a smooth experience across channels such as, Paynimo payment platform, which is capable of transacting across platform, channels and devices allowing merchants to transact through smartphones. Many start-ups have entered the space to simplify mobile money transfer, such as Chillr application, which provides peer-to-peer money transfer without using bank account details. Few of the leading Indian Banks are leveraging the Chillr platform for P2P payments.
• Several leading banks are launching their own digital wallets leveraging NPCI’s Immediate Payment Service (IMPS) platform. These digital wallets are integrated with social media features. Few examples are Buddy by SBI and LIME by Axis. Similarly, few banks are going for payment solutions enabling money transfer, P2P transfer, and so on for smartphone users, such as PingPay and PayZapp.
• Launched UPI (Unified Payment interface), a digital payment system for mobile-to-mobile money transfer. It enables customers to transact through an app linked with their bank accounts. The vision behind this as shared by RBI was to migrate India towards a less cash and more digital society.
• Granted license to 11 payment banks last year for achieving the objective of financial inclusion by making best use of reach and technology prowess of fin-tech providers in remote areas. Very few of these entities have retained their licenses, One 97 being one of them. While the ground work is supposedly done, 2017 can see the launch of Payment banks and their impact.
• Existing players should opt for strategic collaboration across sectors to increase customer acceptance, penetration of digital payments and create a lucrative model for each participant.
• With the demonetization, the Fin-tech industry in India will take a plunge. Unprecedented growth was seen over the past week and is likely to continue well into next year. B2C players like Paytm, Freecharge and Mobikwik are looking at 10x growth by the end of the next financial year owing to this move. The adaptation of digital payments in rural India is yet to be seen, although payment banks might make this considerably easier.
• The government is also likely to aid Fin-tech startups to push the country towards a cashless economy. The Digital India and Smart Cities initiatives have been launched to promote digital infrastructure development in the country as well as attract foreign investments. The government recently launched a dedicated portal to provide ease in registration to start-ups. IP facilitation support. Startups will get support from the government in expenses of facilitators for their patents filing, trademark and other design work.
• The inception of chat bots and block-chain startups is still very low, and is looking to grow in the coming years. Startups like Zebpay and Recharge Bot, dealing with Bitcoins, are gaining traction, and with the increased talk around block-chains, are expected to grow.
• On similar lines, connected commerce is slowly taking shape. While still completely new to India, 2017 might witness its introduction to the country.