A recent study from Google (Alphabet Inc.) and the Boston Consulting Group (BCG) projects a tenfold increase in digital payments in India, from its current level of US$50bn annually to US$500bn by the year 2020. India is the third-largest economy in Asia and the seventh largest in the world. The study predicts that with the rise in digital payments, the gross domestic product (GDP) of India will rise by 15%.
The Google/BCG report noted that the move to non-cash transactions is taking place across the entire spectrum of the Indian consumer economy. Online shopping, utility bill payments and movie ticket purchases were identified as the top three services for which Indian users make digital payments. Online payments through digital wallets and debit/credit cards have been emerging as a preferred transaction mode, mainly due to ease of transaction, availability of smartphones and internet access, and enhanced security and encryption methods.
As a global merchant service provider, my own company’s goal is to, “support the entrepreneurial dream one transaction at a time.” Every transaction, either domestic or international, involves a set of rules and regulations that govern how the transaction can be processed. It is imperative for emerging markets such as India to continue supporting regulatory policy that benefits – and protects – merchants and consumers both domestically and internationally.
We are passionate about realising our goal and work closely with client companies of all sizes in all risk verticals to implement our turnkey model for managing global payments internationally. This means providing a robust, secure, and flexible payment infrastructure, and serving as a guide through every country’s cross-border policies and requirements.
Strength and realism
Those policies and requirements are a critical part of the equation and when they are designed to strengthen international emerging markets, entrepreneurs can make the most of an emerging opportunity such as in India.
That’s why I will be among those visiting the US capital of Washington DC next week, to participate in the electronic payment processing trade organisation the Electronic Transactions Association’s (ETA) executive fly-in for its members on Capitol Hill. The event, first launched in September 2015, is billed as an opportunity to meet with members of Congress and federal regulators to provide them with insights into just how the payments ecosystem works and to discuss industry issues; in particular to advocate for strong domestic policy surrounding electronic payments.
The US should continue to set the international example for careful, balanced, productive regulation of what is still the strongest economic growth engine in the world today, but at the same time we also have to promote policies designed to strengthen international emerging markets like India.
Economic policy, which affects a country’s ability to provide capital, healthcare, social services, education, and basic infrastructure, does not operate in a vacuum. To be successful, policy must be tailored to the needs and realities of the global marketplace.
It is encouraging to see an emerging economy like India’s benefiting from smart regulatory policy that is designed to support entrepreneurs. Hopefully other foreign markets will take notice and adopt similar infrastructures, not unlike what we have here in the US, that will protect companies doing business across borders.
India presents a tremendous opportunity for payments service providers (PSPs) and others, but we need to encourage and implement regulatory policies that support entrepreneurs in all emerging markets. E-commerce is the single most effective way – and sometimes the only feasible option – for startup companies to attain the market penetration they need in order to survive.
PSD2 heralds a new dawn for mobile payments, as the regulatory technical standards around the upcoming European open banking regulations are expected to put mobile devices at the heart of new payment techniques. But despite the regulatory environment nudging markets towards certain payment types, it is not easy to predict exactly how consumers will adopt the technology.
Only a month ago the FBI announced that fake eBay sales were being used to mask payments from the US to the Islamic State (ISIS). Terrorists and criminals are becoming more sophisticated in terror financing and money laundering, so businesses must be too.
Studies show that many organisations are not aware of the fines they could face after GDPR comes into effect, or lack the technology to allow for compliance. The penalties for non-compliance are high: any breaches incur a maximum penalty of 4% of the organisation’s global annual turnover, or €20m, whichever is more.
Small businesses are the backbone of the global economy, driving innovation that is upending entire industries and fuelling growth and jobs. But they’re facing some tough times.