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Interview - Mahesh Patel Group CTO, AGS Transact Technologies India

Exclusive Interaction - Mahesh Patel Group CTO, AGS Transact Technologies India on meeting challenges of business growth in 2020 by digitisation

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Archana Verma
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India

Business growth in India has seen many challenges in 2020. Mahesh Patel,  Group CTO, AGS Transact Technologies India,   discuss some of its aspects in this interaction with us.

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What are the challenges of business growth of digital transactions in 2020 In India?

Over the last few years, the growth of digital payments in India and the pace of its adoption have been tremendous. Demonetisation and more recently the Covid-19 pandemic has specifically contributed to the surge in digital payments with the category poised to grow 29% annually in developing markets through 2024, according to consulting firm KPMG.

To continue supporting the growth potential of digital transactions and its positive contribution to economy in India, we need a more robust digital payment ecosystem. Infrastructural challenges coupled with lack of digital literacy are hindering the growth of digital payments in the country.  This problem becomes more critical especially in remote parts of the country which struggle with limited penetration of digital payments, lack of awareness as well as high assets cost. With rural population gradually connecting to high-speed internet and improved access to affordable smartphones, there is an opportunity to build trust and drive adoption.

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While there is no dearth of digital payment modes in India, there is a need to make transactions cheaper and enhance interoperability of the payment systems to make them more flexible for varied stakeholders. This provides an opportunity for non-banking companies to not only innovate but also adopt the already available consumer-friendly technologies.

Another factor deterring the adoption of digital payment methods is related to the apprehensions regarding cybersecurity in digital transactions. According to various reports, India has seen about 37 per cent increase in cyberattacks in the first quarter (Q1) of 2020 . This has kept consumers from adopting digital payment methods wholeheartedly especially for online and E-commerce payments.

From the merchant’s perspective, while the current pandemic has pushed them to accept QR-based payments. There are still many in India who remain sceptical about this contactless mode of payment.  In the coming months, QR code acceptance is expected to increase as social distancing might continue to be the norm.

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How can these challenges be met?

The digital payment industry in India is expected to reach $1 trillion by 2023. With the pace and magnitude at which it is growing, it will leverage the opportunities by addressing a multitude of challenges. It is imperative to create a robust payment ecosystem and a secured platform to support and sustain the growing transactions.

To encourage users to adopt digital payments in India, there is a need to bring new form factors of digital payments for easy access to cash. This would act as a bridge for those who are new to the digital ecosystem and would still want to rely on cash. Once they get used to the digital process for accessing cash, gradually they shall also take a leap and transform into digital payment users. 

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Is it possible to have a completely India-based digital transaction technology? 

At AGS Transact Technologies India, we believe that the Indian economy will have the coexistence of cash & digital payments both.  Various initiatives by the Government of India such as UPI have provided great impetus to the digital India initiative. UPI is an indigenous platform which has been widely accepted especially amongst rural users and has put India ahead of many countries in the digital payment ecosystem. In June, UPI payments hit all-time high of 1.34 billion transactions and it is expected to grow further during times of Covid-19.

However, with the increase in number of digital transactions, the cash-in-circulation has also risen in India.

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According to the RBI data, as on July 10, currency in circulation stood at Rs26.8 lakh crore, up 21.4% year-on-year. These numbers are a testimony that with the growth of digital payments, cash also is growing in absolute terms.The convenience of use and easy access are driving forces to this surge. While the pace of digital adoption has gone high and will continue to soar, India has a long way to becoming a cashless economy.

What's the roadmap to expand the business growth of digital transactions in 2020 and in the next 2 years in India?

As per the RBI report 'Vision 2021', digital payments are expected to increase more than four times from 2,069 crores in December 2018 to 8,707 crores in December 2021. With the outbreak of the pandemic, digital payments are likely to strengthen and fasten the adoption as indicated by the recent RBI data which saw volume of digital payments touching 3 billion in March, 2020.

As we go ahead, we can expect to see digital transactions reaching the Tier II and Tier III markets, especially now when we see local retailers, shops being more acceptable towards digital modes of payments. UPI has also been a game changer as it has become a major payment option for Indians. Hence, making banking services more accessible to a wider audience. While digital payments gain momentum, safety of digital payments will be critical to gain trust from consumers.

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