An analysis of payment ecosystem, latest trends and way forward for the players in the $500 Billion Indian Payment Industry.

1. Payments Industry
Analysis to identify blue ocean opportunity in Payments
Industry for a service company
Presented by: Aniket Harsh

2. • Ecosystem
1. Composition
2. Players
3. Indicators of Explosive Growth
• Market Sizing
1. Transaction Trends
2. Insights
• Aiming at Financial Inclusion
1. Overview of Banking Services
2. Infrastructure Analysis
3. Policies and schemes to increase financial inclusion
4. Insights
• Technology Trends and Disruptions
• SWOT Analysis
• Service Lines
1. Scope of service
2. Competitive landscape Digital Marketing and Digital Transformation
3. Competitive landscape Analytics and Data Services
4. Competitive Landscape Insights
• M2M Payments and IoT
1. Market Size and Outlook
2. Trending First Movers
The Digital Payments Industry- Agenda

3. The Digital Payments Industry- Ecosystem
1. Composition

4. Wallets
Internet + Mobile
Banking (with UPI) +
Cards
Payment Services
and Gateways
Payment Banks
Payment Networks
The Digital Payments Industry- Ecosystem
2. Players

5. The Digital Payments Industry- Ecosystem
3. Indicators of explosive growth

6. Revenue OpportunityTRANSACTION VOLUME IN MILLIONS
2014 (A) 2015 (A) 2016 (A) CAGR 2017 (E) 2018 (E) 2019 (E) 2020 (E)
RTGS 85.29 92.87 98.94 5% 103.95 109.23 114.77 120.59
NEFT 852.89 1,153.85 1,481.38 20% 1780.70 2140.50 2573.00 3092.89
IMPS 52.13 179.93 389.48 95% 761.40 1488.50 2909.93 5688.72
Cards (Credit + Debit) POS 1,327.08 1,804.26 2,754.57 28% 3513.76 4482.20 5717.55 7293.39
m Wallet 187.86 550.61 965.10 73% 1665.27 2873.41 4958.04 8555.05
Mobile Banking 141.62 308.84 767.54 76% 1348.21 2368.20 4159.84 7306.95
TRANSACTION VALUE IN INR BILLIONS
2014 (A) 2015 (A) 2016 (A) CAGR 2017 (E) 2018 (E) 2019 (E) 2020 (E)
RTGS 605,350.96 676,957.62 802,345.14 10% 881,344.89 968,123.0 1,063,445.45 1,168,153
NEFT 54,455.64 75,262.18 106,103.90 25% 132,523.89 165,522.4 206,737.77 258,215.7
IMPS 373.51 1,319.31 3,106.91 103% 6,295.12 12,754.98 25,843.73 52,363.73
Cards (Credit + Debit) POS 2,953.63 3,759.72 5,285.93 21% 6,417.66 7,791.69 9,459.90 11,485.29
m Wallet 58.20 165.89 375.10 86% 698.05 1,299.06 2,417.53 4,498.96
Mobile Banking 627.11 2,909.79 10,089.95 152% 25,472.45 64,306.15 162,343.27 409,841.6
ESTIMATED REVENUE IN INR
2014 (E) 2015 (E) 2016 (E) 2017 (E) 2018 (E) 2019 (E) 2020 (E)
RTGS 257,286,578.7 264,237,253.42 293,966,154.4 307,319,933.7 321,280,325 335,874,884.77 351,132,420
NEFT 758,199.45 774,570.69 850,547.34 883,765.07 918,280.10 954,143.10 991,406.72
IMPS 71,649.72 73,323.51 79,770.72 82,677.34 85,689.88 88,812.18 92,048.25
Cards (Credit + Debit) POS 29,536,300,000 37,597,200,000 52,859,300,000 64,176,571,677.9 77,916,891,679.2 94,599,039,029 114,852,864,282
m Wallet 1,746,000,000 4,976,700,000 11,253,000,000 20,941,591,258 38,971,851,456 72,525,778,350 134,968,915,481
REVENUE IN INR BILLIONS 31.54 42.84 64.41 85.43 117.21 167.46 250.17
The Digital Payments Industry- Market Sizing
1. Trends in Transaction
PER TRANSACTION VALUE IN INR
2014 (E) 2015 (E) 2016 (E) 2017 (E) 2018 (E) 2019 (E) 2020 (E)
RTGS 7,097,560.79 7,289,303.54 8,109,411.16 8,477,791.28 8,862,905.52 9,265,514.06 9,686,411.60
NEFT 63,848.37 65,227.01 71,625.04 74,422.32 77,328.85 80,348.89 83,486.88
IMPS 7,164.97 7,332.35 7,977.07 8,267.73 8,568.99 8,881.22 9,204.82
Cards (Credit + Debit) POS 2,225.66 2,083.80 1,918.97 1,826.43 1,738.36 1,654.54 1,574.75
m Wallet 309.81 301.28 388.66 419.18 452.10 487.60 525.88
Mobile Banking 4,428.12 9,421.67 13,145.83 18,893.44 27,154.01 39,026.25 56,089.27

7. The Digital Payments Industry- Market Sizing
2. Insights
Payments Industry in India will have
an estimated revenue of INR 250
billion by 2020 through transaction
charges levied on merchants for
POS, and transfer charges levied on
transferor.
90% of revenue will go to
credit/debit card issuing institutions
and m-wallet companies, through
MDR (Merchant Discount Rate)
charged to merchants during POS
transactions.
Per transaction value shows a
decreasing trend for Cards
indicating increase in card based
transactions in lieu of cash
transactions at POS.
M-wallet supersedes Mobile banking in
number of transactions by ~ 20%.
However, an analysis of per transaction
value of m-wallet indicates an increased
usage for small expenses and validates its
positioning as a replacement for small
cash based transactions. On the other
hand, analysis of per transaction value of
mobile banking indicates that it will be
preferred for large value transactions
moving towards replacing web based
online banking as the preferred medium
for banking.
By 2020, m-wallets will be the
preferred medium for digital
transaction, surpassing Cards and
others in volume
UPI and peer to peer transactions pose a
high risk to m-wallets and cards as it
makes account to account transfer
instantaneous, seamless and as
convenient as m-wallet/cards usage.
Biggest advantage of UPI is that it is free
(or practically free, there will be a
proposed fee of INR 0.5 per transaction
levied on transferor) instead of MDR
(which ranges from 0.75% to 2% of
transaction value levied on merchant)
which should make it preferred
instrument for use by merchants big and
small.

8. The Digital Payments Industry- Aiming at Financial Inclusion
1. Overview of Banking Services

9. Customer Serving Cost per channel
The Digital Payments Industry- Aiming at Financial Inclusion
2. Infrastructure Analysis

10. National Payments Commission of India
JanDhan Yojana
UPI
RuPay
IMPS
*99#
Aadhar Enabled Payment
System
Bharat Bill Payment System
Reserve Bank of India
Payments Bank
Reduction of MDR
KYC Relaxation for small
transactions
Aadhar based KYC
Tax Rebate on accepting digital
payments
Simplified Branch Authorisation
Policies
Compulsory opening of bank
branches in unbanked villages
The Digital Payments Industry- Aiming at Financial Inclusion
3. Policies and schemes to increase financial inclusion (Digital India 2020)

11. Banking the unbanked is a primary policy objective to stimulate
economy development and closing the income disparity.
The Digital Payments Industry- Aiming at Financial Inclusion
4. Insights
India fares poorly when it comes
to global average of:
- ATMs per 100000 people (India
19.71:Global 40.554) and
- Banks per 100000 people in
rural areas (India 7.8:Global
12.63)
The customer serving cost in
conjunction with time and cost
requirement to bridge the gap in
global average using traditional
infrastructure heavy model is an
unenticing proposition
Financial Inclusion through Digital enablement- DIGITAL INDIA
ENABLERS
Payment Banks Internet & mobile Penetration Innovation Easing Regulatory Env.

12. The Digital Payments Industry- Technology Trends and Disruptions
Payments Processing will undergo transformation for building Next Generation
Infrastructure. Siloed Legacy systems are hampering ability to respond to
challenge posed by innovation at Non Banks
Blockchain for increased security. Many participants are evaluating Blockchain to
reduce execution time, making it more transparent and secure
Payment service providers will increase focus on leveraging insights and data to
offer value added services. With increased competition, there is a need to
increase customer stickiness and life time value.
Increased investment in security and authentication measures to avoid Fraud and
data breaches
P2P payments reduces steps and eliminates multiple payment charges. Highest
impact will be to card networks (Visa, MasterCard and Amex)
SMS and Web Chat payments and Near Field Communication enabling Greater
convenience and financial inclusion in remote places with limited internet
connectivity
Integration of IoT and Payments creating a commerce for every device

13. Strengths:
- Strong Government backing
- Regulatory Support
- Highly skilled talent pool for innovation
- Positive Venture Capital sentiment drawing
investment for growth
- Mobile and low cost internet penetration
- Scalable Technology allows quick and low
cost onboarding.
Weakness:
- Low Financial Literacy
- Merchant acceptance in rural areas
- Unreliable internet connection in rural
areas
- Inertia to adoption due to tax evasion or
security concerns
- Legacy Architecture
- Low margins
- Absence of infrastructure, laws and
regulation incase of fraud
Opportunities
- Huge untapped market with 60% not having
access to internet and 90% not having a smart
phone
- Chance to Shape consumer behavior using
analytics
- New Technology IoT and AI
- API-fication
- New Innovations in Payments like Near Field
Communication, Web and SMS paytments
Threats
- Customer Loyalty and sustained
engagement
- Price wars/cashbacks hurt ecosystem
- Transaction and customer data Security
- New innovations like P2P payment
platforms, UPI
The Digital Payments Industry- SWOT Analysis

14. • Target Segment- Banks, payment banks,
mobile banking, m-wallets, Retail and
merchants
• Scope of Services -
- Omni channel marketing management
- Campaign management
- social listening and analysis
- Digital asset and content management,
- Marketing Analytics and Consumer insights
- Website and mobile financial solutions
development
- Creative development and release
management
- Content Personalization
- SEO and digital marketing effectiveness
- Enterprise solutions for seamless
integration of new payment instruments
enabling better customer experience and
replacing the legacy architecture.
- IoT and wearables payment integration
- Transaction and data security
Digital Marketing and Digital Transformation Analytics and Data Solution
• Target Segment- Banks, payment banks,
mobile banking, m-wallets, Retail and
merchants
• Scope of Services -
- Data driven Customer Management
- Customer Experience Measurement
- Customer Life cycle Analytics- Acquisition,
conversion, value enhancement, retention
and re-activation.
- Data visualization
- Information Management Solution and
Data archiving
- Data warehousing and Master data
management
- Fraud analytics and prevention
The Digital Payments Industry- Service Lines
1. Scope of service

15. Infosys TCS Accenture IBM
Revenue
Target Segment Full Stack IT Full Stack IT Full Stack IT Full Stack IT
Revenue in BFSI 2.7 Billion USD 7 Billion USD 7.1 Billion USD NA
% Growth QoQ BFSI 0.78% 0.74% 1.81% NA
Digital Marketing
Omni channel marketing mgmt
Campaign management
social listening and analysis
Digital asset & content mgmt
Marketing Analytics & Consumer insights
Creative development & release mgmt
Content Personalization
SEO & digital marketing effectiveness
Digital
Transformation
Website & mobile development
Digital Integration: Enterprise solutions for
new payment instruments
Next Gen payment integration: IoT and
connected devices
Next Gen Transaction and data security
The Digital Payments Industry- Service Lines
2. Competitive Landscape Digital Marketing and Digital Transformation

16. Infosys IBM Accenture Mu Sigma Fractal Analytics
Analytics
Data driven customer mgmt.
Customer Experience mgmt.
Recommendation/Personalization
Customer Life cycle Analytics-
Acquisition, conversion, value
enhancement, retention and re-
activation.
Data visualization
Advanced Analytic (Data Science)
Data Modeling & Predictive Analytics
Big Data
Risk Analytics and Fraud Prevention
Data Services
Information Management Solution and
Data archiving
Data warehousing and Master data
management
Data Security Solutions
Cloud and database as a platform
The Digital Payments Industry- Service Lines
3. Competitive Landscape Analytics and Data Services

17. The Digital Payments Industry- Service Lines
4. Competitive Landscape Insights
Big IT counts BFSI among top revenue generating practices.
Big IT has a highly pervasive presence in BFSI consulting and serving, end to end digital transformation,
data management, Analytics (customer, marketing, risk and fraud) and digital marketing needs.
Seeking entry to domains already populated by competitors will result in a market driven by pricing
and erodes customer loyalty in long run– a Red Ocean Strategy, better avoided
Digital Marketing & Digital Transformation to incorporate the new development relating to M2M
triggered payments enabled by IoT, is a nascent field with a host of related services, that would need
to be adopted by Payment Industry to stay relevant and competitive. As of now, it is a field untouched
by Big IT, A Blue Ocean Strategy

18. The Digital Payments Industry- M2M Payments and IoT
1. Market Sizing and Outlook
Indian connected device is expected to reach a volume of 1.9 billion units by 2020. Major
contribution will be through wearables and automobiles followed by home appliances.
Connected devices and M2M payments, opens scope for digitization of micro payments like
toll, parking fees, utility bills, retail payments etc.
Assuming 20% devices embedded with payment capabilities and one payment per month
worth an average of 300 INR. For an MDR of 1%, transaction revenue will be 13.68 Billion INR
annually.
Companies developing M2M devices
Target Segments include- Banks, m-Wallets, Connected device manufacturers (Apple, Google,
Samsung, LG, IFB), automobile, civic utilities, POS manufacturers etc.

19. The Digital Payments Industry- M2M Payments and IoT
2. Trending First Movers
PayPal’s app for wearables featured on Samsung’s Gear 2 and Gear 2 Neo
wearables. The PayPal app lets consumers make mobile payments, store
and utilize rewards, and send money to other app users.
Tencent OS has introduced its mobile operating systems “TOS” and
“TOS+”, which can operate on multiple devices including smart TVs and
smartwatches, and enable mobile payments.
Intel Corporation has partnered with Ingenico Group to combine Intel’s
technology and Ingenico Group’s secure payment technology for the
Internet of Things. This will pave the way to a broader set of initiatives
and value-added services to address other worldwide devices for the
Internet of Things, including intelligent vending machines, kiosks and
digital signage.
American Express is looking to deliver financial services via wearable
devices. It has recently enabled its service to enable payments through
the fitness band Jawbone.
The Visa Ready Program for Internet of Things now provides IoT device
manufacturers with a path to embed secure payments into their
connected devices, enabling anything from a watch to a car to initiate
payments.

20. The Digital Payments Industry- M2M Payments and IoT
2. Trending First Movers (Cont.)
Topshop has launched a variety of fashionable IoT payment devices. Customers
can choose from various types of smart accessories with payment capabilities,
like keychains, bracelets, and iPhone cases. The range of products, known
as TOPSHOP x BPay, is powered by Barclay’s Bpay.
Samsung has released a smart fridge, known as the Family Hub. Users access
the Family Hub smart features through a 21″ touchscreen that accompanies the
fridge, and includes app integrations like music streaming through Pandora,
recipe books through Allrecipies, and the ability to look into your fridge via
cameras through Samsung’s View Inside. Notably for payments is the
integration of MasterCard Groceries, allowing users to purchase groceries for
delivery while standing in front of a smart fridge.
The China based SAIC Motor is releasing the Rowe RX5, with multiple online
features including online navigation, communication, and music capabilities.
SAIC also features YunOS, Alibaba’s 3rd party online payment solution.

21. THANK YOU