Payment Banks Will Be A Gigantic Step Towards Greater Financial Inclusion: Mohan Nair, CCAvenue

Counted among the pioneers in the online payments space, CCAvenue, owns nearly 85% of Indian merchants who are registered with its payment gateway, as claimed by the company. In last 15 years of its operations, CCAvenue has developed several cutting-edge solutions that are used by businesses in hospitality, education, travel, retail and other major industry verticals. In an exclusive conversation, Mohan Nair, Chief Marketing Officer at CCAvenue shared where he sees the future of digital currency going, transformations observed in the ecommerce industry, changing consumer behaviour and more. Here are the edited excerpts: Inc42: What’s new in the Indian ecommerce space? Could you bring us up to speed on the current market scenario? Mohan: Well, online businesses have been on a constant boom-phase for a while now. Practically, every day new sellers are hopping on the ecommerce bandwagon. What’s more, this year alone, the domestic ecommerce market is set to be worth $38 Bn, demonstrating a staggering YOY growth rate of over 60%. This spurt in ecommerce is giving a much-needed boost to the digital payments space. Next-gen payment options like wallets, cash cards, mobile payment apps have been impacting the growth of online commerce. I believe that India is now steadily opening up to the culture of cashless payments. Inc42: Speaking of digital payments, what is your take on wallets? Are you planning on launching your own wallet? Mohan: Certainly, wallets are the ‘in thing’ now and not without reason. Every other player in the market is coming out with their own wallet as a customer acquisition strategy. These wallets are fueled by offers and are addressing the unbanked Indian population, which stood at 233 million last year. But, what next? With the emergence of UPI, people who only have bank accounts will receive the same level of convenience that wallet users currently enjoy. UPI is likely to become an efficient alternative to wallets. Now about our plans on launching a wallet, being a merchant neutral company, this is not something that we are getting into. We make sure that our merchants' customers remain their customers, and are not prone to be churned. CCAvenue is a ‘customer convenience’ platform, not a customer acquisition platform. If customers want wallets for online payments, we will give it to them. We are the country’s largest aggregator of third party wallets and have all the major wallets integrated on our platform - Reliance JioMoney, Paytm, MobiKwik, State Bank Buddy to name a few. Inc42: The wallet market is driven with discounts and cashbacks. Do you think it is a sustainable model?What are your predictions? Mohan: Who doesn’t love a good discount? And Indian consumers are major bargain hunters! Nearly 28% people buy online only when discounts and promotions are available. Going by the current ecommerce scenario, I’d say that coupon and cashback sites are definitely here to stay, at least until wallets have the financial resources to fund them. In the cut-throat world of ecommerce where each business is tugging it out to be number one, incentivizing customers with such initiatives can be a deal-maker. However, discounts and cashbacks are offered as an incentive only when the customer registers himself with the wallet. So merchant’s customers become the wallet’s customers. Whether this model will sustain or not depends on how much VCs and others have budgeted. Right now, customers are actively using wallets. But, only time will tell how long it lasts! Inc42: What are the key drivers to encourage online payments amongst merchants and customers? And what initiative is CCAvenue taking in achieving this? Mohan: India has the world’s largest youth population with about 41% people below the age of 20 and Internet is almost like a utility to them. Add to that, the smartphone revolution and low data rates on 3G and 4G connections, serving as a stimulant for people to migrate to online commerce. There’s no doubt about it - ecommerce is the place to be and going online is the way to go! It’s about time merchants moved their business to where the customers are. Coming to your question about ways to encourage online payments, I'd say that a wide assortment of payment options, followed by the best transaction success rate, as well as value added services (VAS) and marketing tools like CCAvenue S.N.I.P. and Invoicing, that augment conventional eCommerce and increase the customer inflow into the funnel are what most merchants look for. Customers, on the other hand, are inclined towards cashbacks, flash sales, and more importantly, flexible payment options. At CCAvenue, we’ve been helping merchants and customers get online with our unique combination of a-la-carte and buffet. What I mean is we offer merchants customized solutions to best suit their needs while customers get the widest variety variety of payment options to choose from while making payments during online transactions on the CCAvenue platform. Inc42: With the evolution of ecommerce in India, what are the peculiarities that you have noticed in consumer behaviour? Mohan: Ecommerce is a growing industry and it is getting huge with each passing day. Industry verticals like utilities, education, online retail, government, etc. are getting digitized and offering customers with plenty of options to make online payments conveniently. Earlier, C.O.D. was the most popular payment option. But now, more and more people are placing their trust in digital payments. Even, the incumbent government is promoting online payments with its ‘Digital India’ campaign and driving the country towards a cashless and paper-free ecospace. This has given rise to a new generation of millennial shoppers who want the best of everything. They are scrutinizing reviews, comparing product prices and seeking high levels of customer service. ‘Global E-Tailing 2025’ implied that online retail will gain even more importance over the next few years. Consumers of the future will be far more demanding, causing eCommerce businesses to pull out all stops in the pursuit of customer delight. Inc42: How do you think will payment banks change the payment scenario in India? Mohan: Going by the way it currently looks, I would say that payment banking in India will be revolutionary, especially if you consider the entities who have been granted the initial set of licenses. These banks will basically offer everything that traditional banks do, except for lending services. It will essentially be a hybrid of mobile banking and other new age technologies and as you know, mobiles have reached even the most remote areas in the country today. So, I believe payment banks will be a gigantic step towards greater financial inclusion. They will effectively address the unbanked sectors and bring them into the ambit of formal banking. Even the rural population will get better access to payment and remittance services at low costs. For all you know, this might finally minimize the inefficient cash addiction in the country. Besides this, one of the biggest benefits that payment banks will bring is that the growth in digital cash will help curb the menace of black money in the country. Inc42: Is it possible for India to be a cashless economy? Mohan: Although people are now more accepting of online payments, India still continues to remain a cash-intensive economy. Cash payments are almost inherent to our culture. Nearly 45% of consumers still opt for COD while transacting online. I am not completely denying the possibility of creating a cashless society, but right now it seems a long way ahead. The Indian government has been taking tremendous initiative towards promoting digital payments but there is still room for incredible development with regards to the payments infrastructure and internet connectivity in the country. What people need is a reliable, well-structured and ubiquitous online payments system that will reach even the remotest parts. So, I would say we still have a long way to go for a completely cashless economy. Inc42: What are the key barriers which hamper digital payments becoming more common in India? Mohan: Well, to begin with, we Indians are an apprehensive lot. Agreed, ecommerce has been gaining momentum. Yet, there are some customers who still have security concerns about online payments. Ecommerce businesses obviously have had a lot to do in reposing consumers’ trust in online payments. A recent study also indicated that lack of varied payment options deters consumers from transacting online. In my opinion, there are a few things we can do to overcome these barriers. It is not that we don’t have the will and intent to create a 'less-cash' and more digital society. Initiatives like Digital India and UPI are generating a positive shift towards digital payments. Banks have joined the digital revolution with introduction of mobile banking services to make the rural population feel more financially inclusive. Yet, there is a need to build better and stronger infrastructure. India is the second largest smartphone market in the world with nearly 371 million mobile internet users. A majority of this user base is the busy working population. They are willing to make digital payments, but they expect value and convenience from their online transactions. Unless online payments are made as easy and accessible as cash payments, people are bound to consider them as secondary to cash. Inc42: How can people’s trust be increased in digital payments? What possible measures can be taken to minimize risk and fraud in digital payments? Mohan: As they say, all good things take time. Likewise, the amount of trust customers place in online payments gradually improves with frequent usage. Of course, online retailers can make use of incentives like loyalty programs or discounts to increase sales on their site. But, these strategies work only temporarily. Unless customers are 100 percent sure that there is no threat to their sensitive information or personal accounts, they will be hesitant to pay online. One good way to improve trust in online payments is to offer customers with more control over their transaction process - a suite of payments options to choose from along with additional layers of security at each stage of the transaction, real-time risk mitigation, etc. can encourage customers in going for digital payments. Besides this, security logos like Verified by Visa, MasterCard SecureCode and site seals such as VeriSign are the most obvious ways to ensure that data integrity will not be compromised. Preventing ecommerce fraud is an ongoing process. Companies like ours do constantly keep up with the evolving security landscape. In addition to being PCI DSS compliant, we are also an ISO 27001 certified organization. We, at CCAvenue have always wholeheartedly embraced and adhered to statutory and self-regulatory security standards towards the enhancement of customer confidence in Indian ecommerce.

Payment Banks Will Be A Gigantic Step Towards Greater Financial Inclusion: Mohan Nair, CCAvenue

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