Challenges SMEs in Singapore face in going cashless

With $2 billion as costs incurred by Singapore to manage its cash and cheque-based payments, cashless is the way to go. However interoperability and merchant fees are among key areas that need to be addressed for Singapore's cashless drive.

Even DBS' PayLah though free, won't work for merchants in its current form as it is primarily a P2P payment mode where transactions go through personal account rather than corporate account.

Check this article on the challenges SMEs in Singapore face in going cashless: http://www.straitstimes.com/business/banking/challenges-smes-face-in-going-cashless

Singapore keen to catch up with China on digital payments

Just last week, I had an interesting conversation over dinner with a couple of my Lean In Singapore Women In Tech team members on the developments made in payments in the respective countries we hail from (one is from Australia, another from China, I'm from India).

We spoke of the massive leaps made in developing markets such as China, India and parts of Africa that have left developed countries far behind in how payments get done. My friend from China spoke about the exact thing that Singapore's PM Lee Hsien Loong stated in his National Day Rally speech on Sunday - that Chinese tourists would consider Singapore backward for still doing things the old way!

China has seen an astounding spread with cashless payments. To the extent that China has now reached a stage where the government has to remind merchants and payment providers that cash is still a valid payment option! 

#mobilepayment #cashlesspayment #China #India #Singapore #payments #Alipay

Cashless India - Seeing the vision for financial inclusion come true - Part 1 (Article published on Let's Talk Payments)

The move toward a cashless India is important for several reasons. What are some of the initiatives taking place in the background that will make cashless a reality for India?

“Cashless” India has become quite the buzzword over the past fortnight since the demonetization move was announced. The move toward a cashless India is important for several reasons. India is one of the most cash-intensive economies in the world, and the heavy dependence on cash has several pitfalls for the Indian economy. The much talked-about pitfall has been the existence and growth of a “black” economy, where large chunks of money in the Indian economy are neither accounted for nor taxed. A heavy cash dependence has also meant that despite large budgetary sanctions through many decades of planning and five-year plans, the intended money has not reached the intended beneficiaries. Cash dependence also costs the Reserve Bank of India and commercial banks a huge expense annually just in currency operational costs.

Making India cashless is not an easy objective to meet. It has been almost a decade since I have been tracking the mobile payments space, and occasionally blogging and presenting on new developments in this space. In September 2014 I wrote of an imagined world where we can catch the sight of payments made via the mobile phone to be as commonplace as the cash (or card) used today to make payments. I imagined a world where riding on the promise of speed, convenience and efficiency, large sections of the population would:

• With a few simple taps on the mobile screen, pay utility bills or their children's school fees, make cash gifts...even settle IOUs between friends or split restaurant bills.  

• By just one wave of the mobile, get in and out of public buses and trains.

• By a swipe of the mobile, pay for groceries at the supermarket, or the hairdresser at the neighbourhood salon, or for the daily coffee dose at their favourite cafe.

But my imagination met many roadblocks as when and how this would reach critical mass in India was unclear. While the mobile phone had become an omnipresent feature for most of the country, having it replace cash looked not only distant but also difficult as there was little or no impetus for payers (consumers) to move away from cash or to adopt mobile payments. Nor was there a reason for for the payees (merchants) who face cost and technology barriers to move away from accepting cash.

In November of 2016, as I look at this space again, my attention is drawn to some key initiatives taking place in India that point to us being on the cusp of making mobile payments a greater reality. These initiatives can take us toward a cashless India. And I think the recent demonetization move has made many Indians - on the payer and payee side - rethink their dependence on cash. And despite the downside of demonetization, it can act as a huge catalyst to bring about change.

To set the context for cashless India, I’d like to first highlight the evolution of India Stack. India Stack is a fascinating concept conceived around 2012 when the Central government realised that it cannot deliver citizen services on its own efficiently. What it strives to be in terms of objectives and scale is unseen in India and perhaps anywhere in the world. With India Stack, we will have the largest Application Programming Interface (API) enabled technology platform that allows massive and transparent data exchange and stronger collaboration between the government, private companies, entrepreneurs, and the general public.   

India Stack is built on four layers (and each layer has a specific underlying technology that makes it possible):

1. Presence-less layer: where a universal biometric digital identity allows people to participate in any service from anywhere in the country (Aadhaar authentication and eKYC)
2. Paper-less layer: where digital records move with an individual’s digital identity eliminating paper records (eSign and Digilocker)
3. Cashless layer: where a single interface to all the country’s bank accounts and wallets democratises payments (Unified Payments Interface)
4. Consent layer: which allows data to move freely and securely to democratise the market for data (consent architecture)

The fundamental layer underneath all of these layers is “JAM”, an acronym coined for the trio of elements that India Stack will use. JAM stands for Jan Dhan Yojna (envisages universal access to banking facilities with at least one basic banking account for every household in India), Aadhaar (Unique Identification for all residents of India) and Mobile smartphones, all of which have seen rapid adoption in India.

Let’s now focus on the Cashless layer.

The Unified Payments Interface (UPI) forms the core of the cashless layer of India Stack. In April 2016, the National Payments Corporation of India (NPCI), the umbrella organisation for all retail payments systems in India launched UPI as the next generation online and mobile payments solution. UPI is an advanced version of IMPS (Immediate  Payment Service) that was launched in 2010 offering an instant, 24X7 tool to transfer money instantly within banks across India through mobile, internet and ATM.

UPI today powers multiple bank accounts into a single mobile application of any participating bank. Mobile payments is at the core of UPI and with the massive adoption of mobile phones in India across all strata of society, this makes it most viable to achieve critical mass and succeed. UPI supports both Push (Pay request to send money using virtual address) and Pull (Collect request) financial transactions. Built on top of UPI and equipped with multiple Indian language interfaces, many new products and services have been and will be introduced in India. Here’s a peek into some of the products and services:

APBS and AEPS

APBS (Aadhaar Payments Bridge System) is a system that facilitates transfer of all welfare scheme payments to beneficiary residents' Aadhaar Enabled Bank Account (AEBA). APBS will function as a push transaction. AEPS (Aadhaar Enabled Payment System) is a system that leverages Aadhaar online authentication and enables AEBAs to be operated in anytime-anywhere banking mode by the marginalized and financially excluded segments of society through microATMs. AEPS will function as a pull transaction. The success of AEPS rests on the availability of large number of Micro ATM’s and ATM’s equipped with biometric authentication facilities. As the banking and ATM network is limited in India, newer forms of banks and Business Correspondents (BCs) are expected to step in to service the population (more on this in the next blogpost).

APBS and AEPS will play a huge role in disbursements of government entitlements like NREGA, Handicapped, Old Age Pension, Student scholarship, etc. of any central or state government bodies. This is a big step toward reducing corruption and ensuring intended money reaches the intended beneficiary.

RuPay

This is a new card payment system launched by the National Payments Corporation of India (NPCI), offering a domestic, multilateral system which will allow all Indian banks and financial institutions in India to participate in electronic payments. As it is an cheaper alternative to the more expensive Mastercard and Visa card networks, it is expected to be a hit with merchants, especially the smaller and medium-sized merchants.

*99#

Banking customers who do not have a smartphone or are challenged with usage of smartphone can avail this service by dialing *99# on their mobile phone and transact through an interactive menu displayed on the mobile screen.

Bharat Bill Payment System

BBPS (Bharat Bill Payment System) will function as a tiered structure for operating the bill payment system in the country under a single brand. National Payments Corporation of India (NPCI) will function as the authorized body, which will be responsible for setting business standards, rules and procedures for technical and business requirements for all the participants.

These are just some of the products and services coming from the India Stack that will propel India toward a less cash dependent and a more transparent economy. Many of them have already been rolled out, and are being phased out. As the technology platform provided by India Stack is an open-data initiative and is supported by an open API policy, it paves the way for many enterprises, entrepreneurs and government bodies to collaborate for building cashless services on top of Aadhaar, Jan Dhan and Mobile. This is a huge development for India and is set to change the way the country conducts its financial transactions. More critically, it will change way India’s yet untapped bottom of the pyramid will conduct its financial transactions as the adoption barriers reduce. We all are and will be consumers of this cashless layer - be it as merchants, business owners, beneficiaries of welfare schemes

While the technology platform provides a vast canvas, there are other components too that are critical to make mobile payments and cashless India reach critical mass and to accelerate financial inclusion. Let’s take a look at some of the revolutionary changes taking place in the banking system in India in the next blogpost. 

This article was also published on Let's Talk Payments

https://letstalkpayments.com/cashless-india-seeing-the-vision-for-financial-inclusion-come-true-part-1/

Mobile Payments - a moving goalpost, with lots of goals still to score

As a keen follower of trends in the mobile payments industry for several years, I have been eagerly waiting for the time when the sight of payments made via the mobile phone is as commonplace as the cash or card is used today to make payments (some of my blog posts on previous workplace sites have had gushing references to this). I imagined a world where riding on the promise of speed, convenience and efficiency, large sections of the population would:

• With a few simple taps on the mobile screen, pay utility bills or their children's school fees, make cash gifts...even settle IOUs between friends or split restaurant bills.  

• By just one wave of the mobile, get in and out of public buses and trains.

• By a swipe of the mobile, pay for groceries at the super market, or the hairdresser at the neighbourhood salon, or for the daily coffee dose at their favourite cafe. 

The latest news of Apple's partnership with Visa, MasterCard and Amex, and the expected rollout of its mobile payment platform on its new iPhone (and possibly the iWatch too) has brought the spotlight once again on the action. Here's a snapshot on where the action has been these past few years.

Today, we are seeing mobile phones (and smartphones) becoming mainstream, almost an integral part of daily life for much of the world's population. However, even after a significant amount of investment by several organizations - big and small - and an even larger hype from the media, we are still a far cry from mainstreaming payments on the mobile phones. True action is visible in only selected pockets in certain countries. And to set the right context, the often-cited mobile payments flagship story of M-Pesa is an outlier and exception that has not been successfully emulated in any country other than Kenya. 

The kind of organizations that have made a play for a slice of the mobile payment market is numerous and assorted. Almost every major bank in every country today offers mobile payments. Unfortunately, banks, which have otherwise been at the helm of the payments ecosystem, are grossly lagging behind on mobile payments. While payments can act as the gateway to much deeper financial relationships with their customers, most banks are limiting their mobile payments experience to little more than a view of accounts, transactions, and transfers between accounts.

In addition to banks, a massive potpourri of players have all been actively promoting their mobile payment service including mobile carriers, card companies (e.g. Visa with Visa payWave, Visa Checkout, MasterCard with MasterPass, Amex), P2P and P2B payment service providers (e.g. Paypal, Alipay), money service bureaus (e.g. Western Union, Moneygram), new payment innovators (e.g. Square, Monitize, etc.) and the "non-traditional payment players" such as Google (Google Wallet), Apple (Apple Passbook), Amazon (Amazon Wallet) and even Starbucks which quite successfully runs its own mobile payment service integrating various aspects of the knowledge of the consumer preferences and transaction history, location data, loyalty, etc.

The majority of the services revolve around the concept of the "mobile wallet" which in very simple terms is nothing but a digital version of your physical wallet. It thus is a software application on a mobile handset that functions as a "digital container" for your payment cards, tickets, loyalty cards, receipts, vouchers and other items - all of which may be found in a conventional wallet. Starting from SMS to USSD to WAP / XHTML / HTML5,  we've been seeing contactless mobile payment technologies such as NFC (Near Field Communication), QR Code, 2D barcode as some of the underlying technologies driving some of the services. NFC was touted as the biggest game-changer for contactless payments, but has not really seen an expected uptake. 

With so many players devising and implementing their own strategies, technologies and business models, the mobile payment ecosystem has become highly fragmented and crowded. On one hand, widespread merchant acceptance of any one technology is missing, and on the other, the absence of a distinctive value proposition for the mobile phone as a payment device itself is acting a common barrier to consumer adoption. While worldwide mobile payment transactions are estimated to have totalled $235.4 billion in 2013, a 44% increase from $163.1 billion in 2012, with a projected 38% jump to $325 billion in 2014, the blue-eyed baby of mobile payments - NFC based mobile payments are estimated to account for only 5% of total mobile transaction value. (source: Gartner).

Interestingly, among all the action and media buzz around mobile payments, we may be on the cusp of another digital payments wave. A wave brought on by "wearable technology". The kind of two-way communication with consumers that was made possible by the mobile phone technology is now being explored by the makers of wearable technology. Companies are investing into getting the increasingly "smart" wearables such as watches, glasses, bracelets, rings to also support "wearable payments". 

One of the various projects in this area, an early entrant has been Walt Disney Parks and Resorts' MagicBand, which is a contactless wristband Disney created for its park and hotel patrons to use as a room key, theme park ticket and payment account. In another project,  two students from the Massachusetts Institute of Technology created a ring embedded with an RFID chip commuters can use to pay their fare on the Boston area's bus and subway system. Aware of the drab, or worse outright ugly looks that some of the wearable technologies sport, firms are already sportingly investing to bring sleek and stylish wearables to the market!

Apple's launch of its mobile payments platform next week could be both on the iPhone and iWatch. Maybe it will succeed with consumers and the marketplace in a way that no previous service did. Regardless, while "mobile payments" itself may be a moving goalpost, it remains interesting to see the industry and technologies evolve over the next few years and a lot of goals scored for all entities involved, most importantly for the consumers.