Tech trends in modernising digital payment transactions: Lalit Manchanda, Mastercard

Lalit Manchanda is currently the Vice President Research and Development at Mastercard and he works on developing compelling innovations in space of digital consumer and merchant solutions and made effective use of AI, Blockchain, IoT and other areas.

DQ: How pervasive are emerging technologies when it comes to the financial industry?  

Lalit Manchanda: During the pandemic, technology played a pivotal role in helping people work remotely, connect with loved ones, find new means of entertainment and recreation, and buy essentials from the safety of their homes. Digital payments saw a significant uptake, with people choosing digital over cash as currency notes were perceived as a potential virus carrier. It also led to a surge in the adoption of contactless payments using NFC through contactless cards, mobile phones, and QR codes. 

With its tap-and-go technology, contactless card transactions offered a faster and safe approach to digital payments. Similarly, QR codes are secure and inexpensive and can be used in-store, on e-commerce platforms, and instant messaging apps. Payments tokenisation – replacing the 16-digit primary account number with a unique identifier token – has become more prevalent with increased mobile transactions. These digital payment methods provide convenience, help mitigate risks, and make payments simple and secure.

In addition, we have seen a rise in real-time payments (RTP), a critical element of nation-building as the government is focusing on boosting digital infrastructure and financial inclusion. Today, India is the global leader in RTPs, with 41 million transactions per day in 2020, more than double the number for 2019. 

DQ: The COVID-19 pandemic has forced even the most uninitiated sectors to adopt digitisation. What impact did this trend have on the financial industry?

Lalit Manchanda: The health crisis led various sectors to embrace digitisation to meet the unexpected needs of their customers. For example, small businesses in India were largely cash-dependent. However, in the wake of COVID, micro and small and medium enterprises (MSME) adopted digitisation to stay afloat and benefitted from it through new customer acquisitions and increased transactions with existing customers. According to one industry report, SMEs will likely add $158 billion to $216 billion to India’s GDP by 2024 with digital adoption, while more than 61 percent of the MSMEs can effectually rise to pre-COVID levels in the near future. Also, the usage of in-app features per user increased by 72 percent over the last year, indicating that MSMEs have started utilising the full functionality of digital solutions.

In line with this trend, several affordable solutions were introduced to enable small businesses continue their businesses hassle-free. For example, at Mastercard, we launched Soft PoS for merchants to help them accept contactless payments directly via their smartphones. Soft PoS enables the acceptance of contactless payments made with plastic cards and any virtual equivalents  e.g. Google Pay, Apple Pay, wearables, and more. This provides a cost-effective solution for all micro-merchants and SMEs by eliminating the need to invest in a PoS device. 

Similarly, the pandemic pushed a large percentage of farmers to voluntarily turn to tech integrations that enabled supply chains to run more efficiently. Digital marketplaces help the farmers choose from a variety of sellers and products, evaluate the available price options, and get the best offer price for their produce. With Mastercard Farmers Network (MFN), we supported Indian farmers by introducing them to digital payments that increased their business efficiency and provided them access to marketplaces that helped eliminate the need for middlemen.  

DQ: How are emerging technologies being applied in the industry today?

Lalit Manchanda: Emerging technologies such as artificial intelligence (AI), cloud, and voice commerce are being applied across the industry today to build simple, safe, and smart solutions for consumers.

For example, Mastercard collaborated with Signzy, a leading regtech startup, to launch a video-based KYC (Know Your Customer) solution for our banking customers. Backed by AI and machine learning technologies, Signzy’s video KYC solution features security protocols to prevent unauthorized system intrusion or attempted fraud. While 3D secure technology improves authentication for e-commerce and m-commerce environments, algorithms powered by AI/ML proactively pick up any irregularity in the payment flow and alert a bank in real-time. 

Cloud is another area powering use cases that require hosting closer to the customers because of performance, cost, and other reasons. At Mastercard, we are enhancing our Tap on Phone product by introducing Cloud Point of Sale (POS). Cloud PoS empowers ecosystem partners to develop and implement their Tap on Phone offering, saving both cost and time. 

Voice commerce using smart speakers and voice assistants is another area that is picking up. These devices are making the journey of consumers from discovery to purchase a lot easier

DQ: What are some of the trends you foresee over the next few years?

Lalit Manchanda: The future of payments is faster, safer, borderless, and inclusive, with consumers in control. To deliver the choice and flexibility that customers expect, we need to offer payment solutions that improve their purchasing experiences with frictionless, secure technologies.

5G is here, and with higher bandwidths and frequency, allow more devices to be connected and improvements on location accuracy. As new devices connect, machine-to-machine (M2M), voice commerce, and autonomous (IoT) payments will also become more prevalent. As a result, payments use cases will expand, from appliances at home to unattended retail services. The use of secure tokens will help bring security and consumer control to such payment scenarios.

Advancements of technologies like Ultra-wideband (UWB) and Bluetooth Low Energy (BLE) will enable contactless payments to be made from longer distances. This capability will allow walk-in and walk-out payments capability for transit and food and beverage use cases. The key to success for such use cases is to ensure seamless a commerce experience. Hence the adoption of contactless now is critical for these future use cases to thrive.

In addition, the future of AR/VR is merging towards an amalgamation of the physical and virtual world, better known as the metaverse. As people interact in this virtual world as if they do in the physical world, payments will have a role to play. 

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