Still riding on the demonetization effect of electronification of payments in India, American Express India, the multinational financial services provider, has added over 100,000 merchants in its current base in 2016. The credit card issuer has been witnessing a significant growth in spending by consumer across categories like apparel, consumer electronics, jewellery, mobile handsets and at departmental stores. The company has also partnered with leading merchant acquirers like SBI and ICICI in India along with using big data analytics to develop highly tailored offerings, for merchants and customers. Hence, discussing about the company’s focus on using its relationships, technology and data to better serve its customers and open up commerce opportunities for its partners, Anurag Gupta, Vice President, Merchant Services at American Express India spoke to Indianretailer.com.
How has demonetization and digital push provided a fillip to the growth of merchants for AmEx cards in India?
The recent demonetization presented an opportunity to help consumers and merchants transition towards digital payments.We are excited that the importance of a strong payment sector continues to be the focus of government of India. The cash crunch that followed the announcement, coupled with the following highlights, bent the curve for electronification of payments in India, traditionally a cash intensive market. For American Express, demonetization has a clear positive impact in driving higher card member engagement and merchant network expansion. As per a recent RBI report, the credit cards category has witnessed a 1.4x increase in the value and 1.5x increase in the number of electronic transactions in March 2017 compared to March 2016.
Acquirers were given the mandate to double card accepting terminals by March 2017. An interoperable QR code standard was introduced, enabling small and micro merchants to accept cards and digital wallets. Tax incentives were introduced to promote small value payments on cards and digital wallets. Second-factor authentication was eliminated for online transactions below a threshold value. Customer surcharge was reduced and rebate and incentives were introduced by the government.
What are the major retail transactions for which AmEx credit card is being used?
During the last year, we have witnessed significant growth in spends by our card members in the retail category. Within this segment, the growth drivers have been apparel, consumer electronics, jewellery, mobile handsets and departmental stores. Our card members are high spenders and spend approximately 3-4 times the industry average on their cards.
What is your current number of merchant base? How much SMEs contributes to your total number of transactions?
For merchants, the benefit is a one-stop payment and servicing solution across all networks. We have made great progress in expanding our merchant coverage in everyday spend categories of retail, fuel stations, grocery stores, fast food restaurants, and online merchants. Over the last two years, our merchant coverage has grown manifold. In 2016 alone, we added over 100,000 merchants to our existing base in India. Additionally, we continue to focus on expanding our coverage in destination cities in India where our card members travel.
Please elaborate on your merchant expansion strategy for the current fiscal?
We are consistently working on expanding our merchant base to increasingly allow our card members to use their cards for making payments instead of cash. Our endeavor is to ensure that our card members use AmEx for their daily spends and also earn valuable rewards along the way. Besides our own merchant acquisition channel, we have also partnered with leading acquirers like SBI and ICICI in India, to expand our coverage and be where our card members would like us to be.
Please tell us about the closed-loop model?
We are a company with a global presence in all parts of the payments chain. We operate as a card issuer, network, processor and merchant acquirer. This enables us to operate a closed loop network, onto which we acquire both card members and merchants. This model differentiates us from the competition and allows us to see the payment transactions from the card member and merchant perspective.
In other words, this means we can identify every single card member transaction at our merchants and use big data analytics to develop highly tailored offerings, for both merchants and customers. These customer insights and spending behaviour patterns help merchants identify the most valuable existing and potential customers, and optimise relationships with them to maximize loyalty. We also offer merchants the opportunity to partner with us for joint marketing loyalty programs to attract this profile of card member and develop finely tuned localized marketing and service delivery strategies.
We are focused on using our relationships, technology and data to better serve our customers and open up commerce opportunities for our partners. It's about moving from payments to commerce – payment is enabling a transaction; commerce is connecting buyers and sellers in new markets and building loyalty between the two. The closed loop is a major advantage for American Express and globally, our integrated payments model processes about $1 trillion in spending through the network each year.