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Paytm, a leading Indian mobile wallet, and Visa, which is one of the top card networks in India, both recently announced initiatives that might promote increased digital payment usage, specifically pertaining to growing card payments, throughout the country, according to The Economic Times.
Paytm is launching POS devices. In an effort to expand its in-store presence, Paytm is introducing its own point-of-sale (POS) terminals. The company may also make mobile point-of-sale (mPOS) devices to better access small businesses. Paytm currently operates a QR-code based mobile wallet that conducts offline transactions, as well as credit card issuance, wealth management, and stock market trading, competing with Google Tez, PayPal, and Whatsapp. Adding terminals to its product lineup could help Paytm compete with larger acquirers, including State Bank of India and ICICI Bank.
Visa will cut debit card fees. Visa announced that it’ll cut the transaction fees on debit cards it charges to merchants in India by up to 95%. Starting July 1, Visa will implement a $0.02 per-transaction fee for purchases over $30, down from the $0.04 that it charged for all transactions previously. Lower fees make card acceptance more affordable, which could encourage more merchants to begin accepting cards. That might ultimately raise Visa’s transaction volume in a key market for the firm — it currently holds 40% market share in India — and help reaccelerate Indian growth.
These firms can help accelerate government initiatives to lower cash usage.Indian demonetization, in which 86% of physical currency was removed from circulation in late 2016, spurred digital payment adoption, but there’s still a long way to go before digital payments overtake cash. Major mobile wallet and digital payment players, including Paytm and Google Tez, have millions of users, but only 14% of adults in India make mobile payments on a weekly basis, and only 6% do so daily.
And though cards are a nonmobile option, they’re not popular. POS terminal penetration is low — the government is hoping to reach 5 million terminals by the end of the year, up from the current 3.1 million — and the roughly $118-$178 cost for POS terminals in the country combined with card fees could be prohibitive to merchants. As new banking initiatives encourage card adoption, a combination of more accessible POS terminals and lower fees to merchants could stoke acceptance and encourage more payments, in turn growing the industry.
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Source:: Business Insider – Finance