convergence of payment systems

* Convergence of Payment SystemsEmerging Markets - Trends & Evolution

*Payments in Emerging Markets Setting Up the PaceModernization of Payment Systems Payment Systems at the heart of financial growth Inclusion approach on Banking Risk Management Increased Govt spending on Infrastructure

Growth of The Banked Over 3 crore no-frills account opened in 3 years Adoption of electronic payments by the mass customer Debit Cards - 50% CAGR in India over last 5 years

Growth fueled by New Channels Increased e-commerce activities 80% CAGR in Internet based Payments over last 5 yearsMobile Banking & Payments Mobile Payments across the world expected to double in 2 years

Innovation in Market place Mobile: M-PESA P2P Payments opening by Non Banks

*Convergence of Payments Shaping up the Future CompetitionRegulationCustomersInnovation

*Customer Driving the Convergence BusinessMass Customer Upward Mobile GovernmentCitiTap - IndiaZAP Mobile Payments Tanzania, Uganda & KenyaE-zwich - GhanaChina Union PayRural Smart Cards - LatAm

*Regulations Facilitating the Change Fragmented Payment Systems

Restricted availability of Clearing and Settlement window

Lack / Multiplicity of validation procedures

High risk of fraudulent activities Today

Centralized and Inter Linked Payment Systems

24 X 7 availability for low value payments

Standardization of Identification & Validations

Increased Electronification of Payments , Centralized databases to reduce risk of Frauds Tomorrow Sistema de Pagos en Moneda Local (Brazil and Argentina)East African Payments System Harmonisation Committee (East African Countries)Payments and Settlement Systems Act; Establishment of NPCI (India)

*RBI Vision of Payments in India Payment and Settlement System Act 2007 Set up of NPCI Promotion of electronic modes of payments India Money Line , India Card , Centralized ACH

Increased responsibility on the Banks for enhancing the Payment Networks Banks are in the centre of all transactions

Aligning the strategic objectives around Payments Reusability of Payment Services across business functions

Strategic review of Payment Systems inside the banks and preparing for the future world of non stop payments faster , easier and cheaper !

*Financial Inclusion Introduction of no-frills accounts Freeing up of Bank branches and ATM expansion Allowing various entities to act as Business Correspondents Simplified KYC norms

Strong focus on financial education and financial inclusion as market opportunity is recognized by most banks

Initiatives to drive down costs through infrastructure sharing and technology innovations

Strategic review of current business models to ensure the hurdles of last mile connectivity are done away with

*Innovation The Perpetual DriverMobile & NFCSmart CardsInternet PaymentsSocial Networking Huge Untapped Market

Quick and Convenient

Capable of Displacing Cash Technology to play a major role

Can provide Top-of-Wallet status

Suica in Japan & Octopus in HK Increased time spending on these forums

Extend Banking Services apart from marketing & Branding Large reach at minimal investment

Apprehensions over security and privacy Taking success of cards to the next level

One card does it all Safe and Secure

Tool for Microfinance and Financial Inclusion e.g. Rural Smart Cards in LatAm Witnessing unprecedented growth all over

Comfort and Convenience Broadened product offering such as GiroPay, PC Pay, EPS etc.

Enhanced security- virtual keyboard, virtual card, multi-facto authentication

*Defining the Competitive Landscape

Acquisition : Merchant Services & ePayment Gateways - P2B and B2B business, tremendous opportunity for brand building and increasing retail customer base

Corporate & Business : Accessibility through channels with minimal user intervention, Wide Coverage, Extensive reporting & alerts and capability to Provide Single Window Service SMEs : Wide distribution , Availability of easy to use channels, Introducing new services in collaboration with MSPs, Faster Settlement Services for Banks : Currently at group consolidation level white labeling likely to emerge as a key driver for ROI Channel (Cross !) Experience is set to be a key differentiator

Reusability of Payment Services will provide opportunities of maximizing RoI

Scalability of the servicing platforms will provide the required foundation for sustaining growth

*Enterprise View of Payment Convergence

*Evolving Trends in India :Rapid Growth of Electronic Payments

*Evolving Trends in IndiaMobile Phone based PaymentsDeep penetration of mobile phone across social and economic statusRecognized as a feasible model for financial inclusion owing to coverage and low costIndia has adopted the Bank Led Model Regulations like KYC, AML, CFT and STR applyTransaction amount limits applicablePre Paid CardsAnother channel to mobilize financial inclusionCan be used within the existing card networkExpandable to other technologies like internet wallets, smart cards etcRegulations like KYC, AML, CFT and STR applyLoading limits applicable

India Post Collaboration between Banks and India Post exists for financial inclusion. HoweverIndia Post aims to computerize and network all post offices by 2011-12Will aggressively seek for MOUs with State & Central Government for social security schemesAims at 100% increase in revenue from financial remittances and 50% increase in revenue from savings accounts by 2012Targets financial inclusion growth of 10% in the next 5 years

*Evolving Trends in IndiaNREGA

Coverage : all districts, 3 Cr householdsChallenges in Payment transparencyLast mile IT reach not availableNew payment methodologies being exploredFertilizer SubsidiesDirect payment to farmersNew process and modalities have not been finalizedStrong possibility for all such government payments to finally gravitate to a common platform

Other Game ChangersNPCI - Retail paymentsConsolidation of various retail payment systems. Creation of national ACHIntroduction of India 24 x 7 for faster and round-the-clock funds realizationStrong drive for financial inclusionUID Introduction

*Development and Implementation of TCS BNCS for Payment Programs of Large Financial Instttutions Application Maintenance for multiple payments application Development for Large Financial Institutions Providing BPO services for operations across 21 counties processing 150 MM transactions annually TCS Research & Innovation work for new and upcoming IT Trends Development and Maintenance of Payments Clearing Infrastructure (LVP) for IndiaTCS Payments ExpertiseProduct Development

Application Services

BPO Services

*Thank You!

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convergence of payment systems

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