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WhatsApp may enter digital payments segment: Co-founder Brian Acton

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Instant messaging app WhatsApp, owned by Facebook Inc, is considering making an entrance in the digital payment services market in India. This would be the company’s first such offering globally. India is WhatsApp’s biggest market, home to 200 million of its billion plus global users.

Digital transactions in India have surged after the government’s recent demonetisation drive and the focus on making the economy cash-less. Earlier this year, WhatsApp's co-founder, Brian Acton, had revealed that the app was in early stages of investigating digital payments in the country. Acton also indicated that he had spoken with the Indian government about the matter.

Other global companies have also zeroed in on the market. Swedish communications app Truecaller, which has a large user base in India, started a mobile payment service in the country based on the UPI platform. Samsung Electronics has launched a mobile payment service that enables consumers to pay for products and services by simply waving their Samsung smart phone near a cash register.

Online marketplace Amazon India has secured a licence to operate pre-paid payment instrument (PPI) or mobile wallet in the country as it tries to compete more aggressively against rivals Snapdeal and Paytm. The approval will help the US-based giant to cash in on the thriving market in India.

The digital payment landscape in India is clearly headed for a massive transformation.

“India is in the midst of huge disruption in the world of both financial technology and in terms of social innovation, there is huge innovation and this disruption will enable India to leapfrog,” says Amitabh Kant, CEO of Niti Aayog, government policy think-tank.

According to a new report by consulting firm KPMG, Indian consumers have shown tremendous affinity to digital technologies, with growth rates for mobile phones and e-commerce adoption far outstripping rates in developed economies. The government’s Digital India initiative aimed at transforming India into a digitally empowered society and knowledge economy will further accelerate awareness, availability and adoption of digital technologies in the years to come.

One of the key policy challenges facing the government currently is that of financial inclusion. As of 2014, approximately 53 % of India’s population had access to formal financial services. Digital payments act as a key enabler for accelerating financial inclusion.

India has the third largest internet user base in the world, with more that 300 million users. Nearly 50 % or 150 million users are mobile-only internet users.

The government is working to create an ecosystem for a cashless digital economy. This means fostering an environment conducive for growth and innovation in the fintech industry. The Indian fintech software market is forecasted to touch US $ 2.4 billion in the year 2020 from the current US $ 1.2 billion.

Focus on banking for the unbanked through schemes such as the Jan Dhan Yojana where 200 million unbanked individuals were brought into the banking sector as well as the extension of Aadhaar to pension and Provident Fund will help improve the case for financial inclusion.

The banking industry has also seen mobile and internet banking transactions increase to 27 % overall transactions. There has been also been significant growth in the e-commerce market place. India’s e-commerce market (revenues) grew from US $ 3.8 billion in 2009 to US $ 23 billion in 2015. Online shopping is also inclined significantly towards mobile devices.

While initiatives such as DigiShala and the introduction of United Payments Interface (UPI), Bharat Interface for Money (BHIM-internet based mobile application) can help support in faster adoption and transition to digital payments, there are challenges that also need to be addressed.

Cybersecurity is one of the most critical challenges faced by stakeholders of the digital payment ecosystem. With more and more users preferring digital payments, the chances of getting exposed to cybersecurity risks such as online fraud, information theft, and malware or virus attacks are also increasing. Lack of awareness and poor digital payment ecosystem are some of the primary reasons that have led to the increase in these attacks.

The KPMG report sums up that the challenges can be addressed by having a robust regulatory framework in place, an effective customer redressal framework, fool proof security measures to enable confidence and trust, incentives for larger participation and benefits similar to cash transactions i.e. ease of use, universal acceptability, perceived low cost of transaction, convenience and immediate settlement. These measures would ensure the long-term success of the digital payments services in India.

Digital transactions in India have surged after the government’s recent demonetisation drive and the focus on making the economy cash-less. Earlier this year, WhatsApp’s co-founder, Brian Acton, had revealed that the app was in early stages of investigating digital payments in the country. Acton also indicated that he had spoken with the Indian government about the matter.

Other global companies have also zeroed in on the market. Swedish communications app Truecaller, which has a large user base in India, started a mobile payment service in the country based on the UPI platform. Samsung Electronics has launched a mobile payment service that enables consumers to pay for products and services by simply waving their Samsung smart phone near a cash register.

Online marketplace Amazon India has secured a licence to operate pre-paid payment instrument (PPI) or mobile wallet in the country as it tries to compete more aggressively against rivals Snapdeal and Paytm. The approval will help the US-based giant to cash in on the thriving market in India.

The digital payment landscape in India is clearly headed for a massive transformation.

“India is in the midst of huge disruption in the world of both financial technology and in terms of social innovation, there is huge innovation and this disruption will enable India to leapfrog,” says Amitabh Kant, CEO of Niti Aayog, government policy think-tank.

According to a new report by consulting firm KPMG, Indian consumers have shown tremendous affinity to digital technologies, with growth rates for mobile phones and e-commerce adoption far outstripping rates in developed economies. The government’s Digital India initiative aimed at transforming India into a digitally empowered society and knowledge economy will further accelerate awareness, availability and adoption of digital technologies in the years to come.

One of the key policy challenges facing the government currently is that of financial inclusion. As of 2014, approximately 53 % of India’s population had access to formal financial services. Digital payments act as a key enabler for accelerating financial inclusion.

India has the third largest internet user base in the world, with more that 300 million users. Nearly 50 % or 150 million users are mobile-only internet users.

The government is working to create an ecosystem for a cashless digital economy. This means fostering an environment conducive for growth and innovation in the fintech industry. The Indian fintech software market is forecasted to touch US $ 2.4 billion in the year 2020 from the current US $ 1.2 billion.

Focus on banking for the unbanked through schemes such as the Jan Dhan Yojana where 200 million unbanked individuals were brought into the banking sector as well as the extension of Aadhaar to pension and Provident Fund will help improve the case for financial inclusion.

The banking industry has also seen mobile and internet banking transactions increase to 27 % overall transactions. There has been also been significant growth in the e-commerce market place. India’s e-commerce market (revenues) grew from US $ 3.8 billion in 2009 to US $ 23 billion in 2015. Online shopping is also inclined significantly towards mobile devices.

While initiatives such as DigiShala and the introduction of United Payments Interface (UPI), Bharat Interface for Money (BHIM-internet based mobile application) can help support in faster adoption and transition to digital payments, there are challenges that also need to be addressed.

Cybersecurity is one of the most critical challenges faced by stakeholders of the digital payment ecosystem. With more and more users preferring digital payments, the chances of getting exposed to cybersecurity risks such as online fraud, information theft, and malware or virus attacks are also increasing. Lack of awareness and poor digital payment ecosystem are some of the primary reasons that have led to the increase in these attacks.

The KPMG report sums up that the challenges can be addressed by having a robust regulatory framework in place, an effective customer redressal framework, fool proof security measures to enable confidence and trust, incentives for larger participation and benefits similar to cash transactions i.e. ease of use, universal acceptability, perceived low cost of transaction, convenience and immediate settlement. These measures would ensure the long-term success of the digital payments services in India.

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