Making Digital Transactions Simpler And Secured
The government has been aggressively pushing for a cashless economy and ‘digital payment is becoming a ‘new normal.’ While it is clear that online transactions are on the rise, India’s digital payments market is still in its nascent stage. In a recent conversation with CXOToday, Rajeev Agrawal, CEO, Innoviti Payment Solutions Pvt. Ltd explained the vast opportunity for digital lending solutions, the current challenges for digital payments companies and how Innoviti is striving to address this gap.
Innoviti has been a pioneer in the use of technology to help businesses across the retail supply chain to better organize the flow of money in their business operating cycles. Using its indigenously developed technology and constant innovation, Innoviti has delivered differentiated solutions for digital payments acceptance, consumer credit distribution and SME lending that have become benchmarks in their respective markets.
A Ph.D. graduate from IIT Bombay, Agrawal said that on the B2C side, digital payments currently account for less than 10% of total retail payments in India resulting in a market opportunity of more than $500 Bn annually. Similarly, on the B2B side, the shortfall in supply of credit to SMEs is estimated at more than $300 Bn. This in turn is opening a vast opportunity for digital lending solutions.
There are many challenges before the full benefits of digitalisation can be realized. Addressing key challenges in the industry, Agrawal mentioned that retailers face with digital payments is the operational complexity when the customer uses various kinds of options to pay, it could be through a credit card, debit card, Sodexo card or some other gift card. It could also be paid through mobile. So, for each one of the various different options the consumer uses, the retailer must reconcile these multiple types of payments with his actual sale billing. This daily reconciliation headache becomes one of the biggest issue for today’s retailer.
The second pain point pertains to the multiple payment options like Paytm, Mobikwik, Sodexo, BHIM, credit and debit cards, retailers have to do a lot of technology integration. “Retailers face a challenge in terms of the amount of technology they have to manage by associating with multiple technology partners and manage multiple support windows. For example, you have to call one person for one type of payment issue, call another person for some other issue, that increases the cost of doing business for them,” he said.
Another key challenge is, with the kind of telecom network we have in India, the reliability is very poor and this leads to a lot of failures in payment transactions. Because of these failures, a lot of anxiety builds up with the retailers and consumers. “The retailer finds it frustrating knowing that there is no other option but to accept digital payments, but at the same time there is this unreliability leading to unpleasant front –end situations where he often has to face the wrath of the customers,” said Agrawal.
He explained that issues like money getting debited but the charge slip not getting generated and thereafter customer getting double charged if he makes a second swipe to complete the previous transaction. These types of issues spoil the overall customer experience, waste the cashier’s time and eventually customer loyalty is lost. So, if you ask me, first challenge is reconciliation, second is aggregation, and third is transaction processing unreliability due to infrastructural constraints.
Despite challenges in the digital payments space, Bengaluru headquartered Innoviti seems to be right on track. Since its inception in 2002, the company has witnessed a phenomenal growth and today has a workforce of more than 150 people across offices in Mumbai, Chennai, Delhi, and Hyderabad. Additionally, it has agents in 22 cities across the country.
The company has been constantly developing technology that delivers unique solutions for digital payments acceptance, consumer credit distribution and SME lending over the last decade. Apart from its propriety #LookAhead technology which provide faster, more reliable and lower cost payment processing to merchants, and homegrown uniPAY Next and smelending.com platforms, Innoviti has launched faster contactless card acceptance for the first time in multiplexes, for the first time, launch of dynamic-QR code base UPI acceptance in offline retail through its UPI@POS solution in collaboration with NPCI.
On how Innoviti solves some of the challenges in the digital payments and lending world, Agrawal said, “We do a lot of artificial intelligence and machine learning based value-addition to our payment processing techniques.” Giving an example in this regard, he said, “In the field of reliability improvement, we have a technology called “LookAhead”. What it does is to find the optimal combination of cost and reliability for every new transaction.” He added, “As a new transaction is happening, based on the last transaction that happened in the network, it literally “looks ahead” to figure out the most reliable banking path to send the transaction through for fastest processing time. It is almost like google maps where you have started from a point A and it will give you one route which will take you so much time and this is another route which will take you so much time. What we did is developed our own algorithm around finding the optimal pathway - which path will be most cost effective and will have the highest reliability.
The company also allows the retailer to prioritize between optimising cost and optimising reliability. Agrawal informed, “There will be some retailers who are very cost sensitive because their margins are small. So, they are okay if a transaction fails but cost should not be compromised. And then there are some retailers who are very experience centric. Under no condition do they want the customer experience to go bad. It doesn’t matter if the cost of transaction is slightly higher for such retailers. So, we give them the options to choose the optimization priority which suits them and this is called “Look ahead” which we have patented as well.”
Agrawal offered another example from a servicing perspective. “Typically, if a merchant’s payment system goes down, they will call up a call centre and register the issue. In such cases we have developed some predictive proactive techniques where, based on the transactions happening at the backend, we can detect when a machine is going to go down by studying the error patterns. We then proactively will go ahead send someone or replace the software even before the customer realises a problem. Many times, what happens is that there is an intermittent error that has come, which we would have detected and rectified at the backend. Now, even before the customer call us to complain, we can proactively call them and inform that there was an issue detected and we have already corrected it. From a service perspective, it has moved from reactive to proactive. Here also we have used machine learning to be able to get to this point,” he said.
Another area the company is working on is the speed of transaction. “We are trying to constantly see how to make the area of transactions faster so that the cashier can save time at the checkout counter. For this we have looked at a lot of database level architectural changes to make sure that we can optimise upon the structure to make the transactions move quicker. So typically, the average is around 7 seconds in the industry and our average speed of processing transaction is down to around 3.2 seconds,” he said.
As per a recent report by Google and Boston Consulting Group, digital payments is projected to reach $500 Bn by 2020, contributing 15% to India’s GDP. Further, by 2020, non-cash contribution in the consumer payments segment is expected to double to 40%.
At present, around 10% of the total retail spending in the country is done digitally through POS machines, e-wallets and other solutions. The number will continue to rise with the increase in low cost and more accessible smartphones and internet connections and trigger from new age companies such as Innoviti that are striving to bring about innovation in this space. As Agrawal aptly summed up, “Overall, the Indian digital payments market is still in its nascent stage and requires a differentiated approach in terms of design and technology given the prevailing constraints in our communication infrastructure, low awareness about digital technologies and trust in technology adoption.”
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