How should we Pay tomorrow?

H.SrikrishnanExecutive Director

How we Pay today?

Population: 1 Billion + Pay by

Cash Cheque Card Electronic Credit Notes Kind

and TODAY is CHANGING

Composition of Today’s Payments

CORPORATE – 30%

GOVERNMENT – 70%

RETAIL/INDIVIDUAL- Insignificant

Wholesale Payments - Today

CHEQUES 1047 clearing houses + 42 MICR centres 27.5 Lac cheques daily avg volume 150,000 cr daily avg value

VS

RTGS 650 + centers & 10,000 + branches 60,000 cr daily avg volume

Data Source RBI

Retail Payments-Today

Cards 50 Million + cards 16,000+ ATM’s 150,000+ POS 20,000Cr + Non Cash Payments

VS

E-Commerce B2C 540 crs in 2004-5 Cards , Direct Debit, Cash on Delivery

Data source Venture Infotek & Internet and Online Assn. of India

Need For Expertise

Micro vs Macro Government Payments Private /Public Partnerships

» Convergence

Barter vs Real Air-miles to Cash

Real time vs Near Time Instant Delayed Batch

Physical vs Remote

New Business Models drive Payments Business Models

eProcurement eInvoicing eFinancial Supply Chain On-line exchange

Automation, integration & Web-enablement as Levers

Banks: Shift from Transaction focus to Value driven Solution focus

Electronic Banking Electronic Banking over Proprietary over Proprietary

NetworkNetwork

Bank-To-BankBank-To-BankFinancial EDIFinancial EDI

EBPP/EIPPEBPP/EIPP

Accepting & Accepting & ProcessingProcessing

Web PaymentsWeb Payments

Internet based Internet based Transaction processing /Transaction processing /

ReportingReporting

Centralization/Outsourcing

Time

Com

ple

xit

y o

f M

an

ag

em

en

t

Decentralized Operations

Centralized Financial

Mgmt

Shared Services

Outsourced Cash

Management

Adoption Trends

Web-enabled, Universal payment channel

Multi-bank access through single, standard open channel

Direct EDI enabled channel/Proprietary Networks

North America

West Europe, Japan, HK, SGP, Aus

APAC, East/central

Europe, Africa

Low Integration/Automation Capability

High Integration/Automation Capability

India @ 2005: A Sanity CheckAutomation

Web-enablement Integration

• Predominantly paper-based process

• Gradual emergence of ECS, EFT, RTGS

•Minimal inter-org information sharing

(Low proliferation of end-to-end solutions like eFinancial Supply Chain)

• Poor Internet penetration among Mid sized corporates

• Offerings predominantly designed on proprietary network

Service Ambition for Payments

Pay Who-ever When-ever in any currency

Provide Instant Value With no settlement delays

Privacy and Security guarantee. Identity establishment Authentication

How will we pay tomorrow

One wallet

Payment Remote

– Via Internet and Mobile Proximity

– Via RFID , Blue Tooth

Devices PC equivalent PDA/Mobile Smart Chip -embedded devices

Key Considerations Open systems

Banks Telcos, ISP’s, Businesses

Cost of payment Paper vs Card vs E&M commerce Division/Region, Enterprise-wide and Country wide

Security Identification and Authentication Multi-Factor Biometrics- Speech and Touch

Eco-Money Usability Environmental Friendly

Preparing for tomorrow

Organization National Payments Council Payments Vision

Participation Beyond Banks

Open systems Platform Communication Security

Legal and Regulatory framework

P2P, P2B,G2P,B2P

Cards

E-commerce

M-commerce

B2B,B2C,B2G,B2E

B2B,B2C,B2G,B2E

E-commerce

M-commerce

Supply Chain

E-commerce

Supply Chain

Online Exchanges

Two Factor

Multi Factor

Multi Factor and

Biometrics

Indi

vidu

als

&

Sm

all B

usin

ess

Mid

siz

e

Bus

ine

ssG

over

nm

ent

&

Larg

e B

usin

ess

RTGS Online

Single Sign-On

Multi Security