The State Bank of India (SBI) has teamed up with a private company to launch a merchant-acquiring joint venture and establish a digital payments platform, called SBI Payment Services, for India and other countries in the region.
In a press statement, SBI said that the joint venture will facilitate the expansion of the digital payments landscape in India, through the platform. This will offer innovative products to suit the requirements of all segments of merchants by leveraging the bank’s brand value and vast distribution network while bringing in AI and other technological capabilities from the private sector to SBI Payment Services.
SBI is the largest state-owned commercial bank in India. It has over 425 million customers, around 600,000 POS terminals, and more than 1.6 million merchant payment acceptance touch points. SBI has migrated more than 80% of its transactions to alternate delivery channels. The joint venture is expected to take this initiative further.
SBI aims to maintain its position as the top acquirer in the merchant digital payments space by providing technologically superior and seamless services to its customers, the SBI CEO said. It also plans to utilise business analytics to develop strategies to penetrate remote Indian towns and cities through merchant-centric digital payments solutions.
The Indian government has been pushing for digital payments. Recently, the Indian Rail Catering and Tourism Corporation (IRCTC) launched a new digital payment application, the IRTC iPay.
IRTC iPay aims to provide a smoother customer experience by implementing a more efficient ticket-booking system and improving the quality of delivery of other travel-related services that are available.
The new platform will not include “third parties” for transactions. Customers will be able to pay with credit cards, debit cards, the unified payment interface (UPI), or an international card. UPI is a system that powers several bank accounts into a single mobile application (of any participating bank), merging several banking features. Nearly 90% of the transactions on UPI and digital wallets are small-value peer-to-peer fund transfers.
The IRCTC will be in direct contact with banks, card providers, and other partners, enabling it to have complete control over the total payment process, which will substantially reduce payment failures. The Indian Railways also plan to introduce an IRCTC prepaid card-cum-wallet and auto-debit soon.
Other digital payment methods, such as online shopping, payment of utility bills (like electricity, mobile, and water bills), and movie tickets have also gained momentum and are expected to grow at an exponential rate. About 81% of existing digital payment users prefer the medium over other non-cash payment methods like cheques or demand drafts.
According to a report, the Indian digital payments industry is estimated to reach US $500 billion by 2020, which will account for 15% of the country’s GDP. It also noted non-cash payment methods, including cheques, net-banking, credit and debit cards, mobile wallets and UPI, will double to 40%.
The fact that online payments are convenient is the biggest factor responsible for the growth of digital transactions in the country.
