On the Rise

Mobile phones in India have become more or less ubiquitous, with everyone from your vegetable vendor to the rickshaw puller to a teenager having a phone. In 2008, India overtook the US to become the second largest wireless market in the world, only behind China.

Today, mobile penetration in India stands at nearly 70%. With this, the case for mobile commerce becomes even stronger.

According to a recent report by Knowledgefaber, the mobile payments market in India is expected to grow exponentially to reach $1.15 bn by 2016.

Additionally, the Reserve Bank of India (RBI) is also making a strong push for m-banking and m-payments, having removed the cap of `50,000 per day per transaction through mobile banking, recently.

The retail sector in India is also expected to see a surge in value to become $1.3 tn by 2020. At present, the Indian retail industry, valued at nearly $500 bn, is largely dominated by unorganized retail with organized segment accounting for only 8% of the total market.

However, with increasing urbanization and rise in disposable incomes in the country, the organized retail segment is expected to grow at 24% from 2012- 2016.

With expanding organized retail, a growing middle-class, and increase in spending power, India presents a great potential for non-cash modes of payment. According to a report by Timetric and Market Publishers in 2012, India occupies 11th position among key non-payments markets globally.

With this, retailers need to keep pace with the rapidly changing consumer behavior and increasing affinity of consumers to go digital. They need to innovate to enhance customer experience and gain customer loyalty across stores. Globally, a large number of retailers, both online and offline, are making significant investments towards their mobile initiatives, with a large chunk of their traffic coming from mobile devices.

In Rage

Today, several mobile technologies are available for retailers to choose from. Near-Field Communication or NFC can enable mobile phones to act as contactless devices for tap-and-go applications, including transport ticketing, payment, loyalty, and other retail services. Retailers can leverage this contactless technology to increase consumer engagement and introduce innovative services.

Another technology, fast gaining ground is QR codes-based mobile payments. QR code is a two-dimensional barcode that can facilitate fast mobile payments at point-of-sale terminals. Smart-phone cameras with decoding software scan the QR code and access user information stored in a bank's network to complete transactions post authentication. This technology requires no special hardware to be installed on the mobile and is compatible with almost every smartphone.

Benefits

In India, today, mobile has become ubiquitous, especially among urban consumers. Mobile payment systems offer several convenient solutions for customers like the mobile wallet can store promotional coupon information, purchase record details; locate and offer discount coupons. Also with the same level of highly secure standards of EMV, SIM cards for NFC are very secure. Given the ease of access, convenience, 24/7 availability and enhanced security, mobile devices would soon become one of the most preferred choices for transactions, payments as well as purchases for customers.

For retailers, the mobile offers quicker processing, reduced transaction and maintenance costs; and receipt of payments in real time. In addition, mobile payment systems also provide retailers with access to valuable customer data that can be used for targeted marketing, resulting in higher engagement, recall and ‘customer loyalty'.

Conclusion

Mobile payments not only make great business sense for retailers, but also are equally appealing for consumers. Having said that, adequate regulations and the right business models are critical to facilitate the mass acceptance of this technology that has the potential to revolutionize the payment system. While the ubiquity of the mobile helps, the need of the hour is to promote a secure and robust mobile payment ecosystem which is customized to the Indian market to increase mass appeal.