mPOS or mobile point of sale is not just a technology uplifting small businesses but more of a phenomenon these days. With the persistence of smartphone and the internet, businesses are beginning to realise the importance of transformation their transactions via mobile. Over the 5 years, mPOS has emerged as a common capacity in the payments ecosystem with increasing number of merchants who previously only accepted cash.
This breakneck speed of mPOS has now force financial institutions to transform their payment mechanics to create an improved customer experience, increase business efficiencies, reduce transactional costs and many more.
In a candid conversation with Sahil from Retailer Media, M.C Kulkarni, General Manager- IT, Bank of Maharashtra shared his take on financial institutions aggressively taking a piece of the mPOS pie. He also spoke about bank’s partnership with an online payment gateway and how it will help streamline their payment process.
Talk to us about the recent partnership with AirPay.
Bank of Maharashtra has entered into a partnership with Airpay, an online payment gateway, to provide mobile point of sales (mPOS) services. This partnership helps to provide a holistic and easy-to-access payment solution, empowering our existing as well as new customers to carry out card-based payments with ease.
This partnership is important because we work very closely with the MSME community and several merchants. mPOS technology helps them compete effectively in a fast changing marketplace, both online and offline. Our mPOS offering will also add value to their business models by enabling them to migrate towards cashless transactions.
At Bank of Maharashtra, we are committed towards the nation’s vision of transforming it into a cashless economy by focusing on proliferation of card acceptance infrastructure across the country.
Share with us the factors responsible for this sudden boom of mWallet industry in the country?
There are several factors which has enabled the growth of digital payments which includes mobile payments as well. The increase in smart phone penetration and internet connectivity has enabled consumers to access digital payments. Also, government’s initiatives to leverage technology to expand the reach of banking channels though initiatives like Aadhar and Pradhan Mantri Jan Dhan Yojana (PMJDY) has empowered the people at grassroots to access financial transactions at their finger-tips. These are some important initiatives which are changing the face of payments landscape in India.
With technological innovation digital payments are convenient, fast and secure. India will probably see an increase in customers who will have smartphones linked to their bank accounts.
However, with the amount of cash in circulation India, Cash is still the king. There is still a long way to go before the masses can use mobile wallets as their preferred choice of payments; there is still apprehension about keeping one’s hard earned money in a digital space. But digital cash is the future as it provides convenience, speed and ensures security
Do you think India is moving towards being a cashless economy?
Paperless payment tools such as cards, netbanking and mobile wallets are on the rise. 65% of the Indian population is less than 35 years of age; they are receptive to newer forms of technology much faster as they emerge as time saving instruments for instance take example of bill payments, movie tickets etc.
The government initiatives to promote financial inclusion are also facilitating the migration towards cashless economy as unbanked people are increasingly becoming part of the banking system.
Unified Payments Interface is in the pipeline and is set to revolutionise the online payments space. All this is indicative of a healthy, thriving digital economy, and sets the way for envisaging a cashless one as well.
How do you analyze the trend in tier II and III cities of the country? How has mPOS helped online retailers to take the lead in this retail war?
Seamless internet connectivity through smartphones, increasing demand of quality goods, growing logistics networks and increased purchasing power in tier II and tier III cities is fueling business transactions in these markets.
The online marketplace can offer more choice to customers in Tier 2 & 3 cities than their nearby physical retail stores. The youth in these areas is more inclined towards online shopping in a desire to be at par with their counterparts in metropolitan cities.
However, the mindset of people in this segment is driven by the ‘cash on delivery’ model because of the lack of trust and information on online payment models. mPOS technology can help solve this problem by transforming the ‘cash on delivery’ model to ‘card on delivery’. It will facilitate customers to transact through their debit/credit cards and empower them to shop without apprehension about the security of online payments.
Where do you see the future of mPOS and e-Commerce industry together 3-5 years down the line?
The Indian eCommerce industry is set to be valued at $38 billion in 2016. The rapid growth in this space is because of the increased use of smart phones. There are several industry reports which suggest cash on delivery still dominates ecommerce transactions, over 83 percent of consumers in India[i] shopped via this route.
From an etailer perspective COD isn’t as beneficial as other modes of payment because it adds a new layer of cash handling to their supply chain and increases the settlement period of online retailers. The mPOS empowers the online retailers by digital movement of money instantaneously.
With online retail sector estimated to be a trillion dollar marketplace, mPOS technology will play a significant role in the development of this sector as it is beneficial to both customers and etailers.
How many of these MPOS machines in circulation at the moment?
There are a total of approximately 1.3 million PoS devices across India from all the banks, out of which less than 100,000 are mPOS devices. Bank of Maharashtra has started supporting mPOS devices only this month and we are expecting approximately 100 devices to be in circulation by the end of this month.
What is the cost for merchants to adopt this technology and complete a transaction?
Over the years the transaction for accepting card payments have consistently declined due increase in transaction volumes. Today, the cost of a debit card transaction is as low as 0.75% of the transaction amount on the mPOS technology.
Which sectors are likely to benefit from adoption of this payment infrastructure and what is pipeline for merchant tie-ups?
Bank of Maharashtra’s mPOS is targeting sectors like education, hospitality, government institutions, retail as well as SMEs who have a Bank of Maharashtra CASA account. With incremental use of digital technology and card transactions on the rise, all the sectors are likely to adopt this technology.
We are focused on increasing our penetration in the education space as the card payment infrastructure is still at nascent stage.
What kind of analytics support will be available for the merchants?
Bank of Maharashtra provides real time data and analytics for transactions initiated on the mPOS systems to merchants through a web based merchant administration system. This system can be easily accessed on desktop and mobile platforms. Merchants can benefit from this online system by analysing various data points such as preferred bank cards for transactions, time frame and location registering maximum sales, which they can utilize to build time based and product based marketing strategies to increase sales.
How do you see this mPOS segment growing in next five years?
Looking at the market trends, the mPOS segment should grow to more than 1 million terminals in the next 5 years.