Electronic payments through mobile

[Joy]

BillDesk is a company that loves trees, albeit indirectly. Established
in early 2000, BillDesk delivers and manages electronic payments and
remittance solutions for various vertical markets, such as banking,
telecom, insurance, utilities and financial services. `Think of all
the paper we have helped save,' prompts the company.

What started as a venture with an initial three-member founder team is
now growing at 100 per cent year-on-year, employs about 250 employees,
and has offices in 30 cities across the country, says M.N. Srinivasu,
Cofounder and Director, BillDesk, Mumbai.

The IIM (Ahmedabad) grad feels the mobile market, though yet to be
tapped fully, will be a big thing in the future. "A large part (over
85 per cent) of the mobile user base today falls within the category
of a `prepaid user' - about whom there is not much information
available in terms of the customer profile or customer preferences;
addressing the needs of this segment would bring with it its own
challenges," he avers, during a recent interaction with eWorld.

Awareness will be key in promoting electronic payments, he adds. If a
customer is well educated about the electronic payment service
options, he/she definitely converts to the electronic habit! Read on.

Excerpts from the Q&A.

How big is the market for the electronic payments industry? What is
your share, and what has been the growth over the years? How is the
Indian market for electronic payments different from other countries?

The electronic payments industry is vast territory and covers both
retail payments and large-value payments; large-value payments
essentially deal with corporate sector payments while the retail
payments cover the person-to-business, person-to-government and person-
to-person payments. Most payments that happen today through cheques
and cash are potential transactions for conversion to the electronic
payments segment; from that perspective, the size of the electronic
payments market is perhaps gargantuan!

BillDesk's focus has been in building a platform and providing
services that provide compelling value for customers to shift from the
physical payments mode to electronic payments.

Towards this, BillDesk has primarily addressed payments that
individuals typically make on a regular basis, viz. utility bill
payments, mobile bill payments, insurance premium payments, monthly
investments into mutual funds, etc, and worked with institutional
players in building and nurturing this marketplace.

We command a leadership position in this space and growth has been
consistently over 100 per cent year-on-year since the inception of the
company.

The Indian marketplace is fundamentally not very different from the
global marketplace; however the size, sale and breadth of the market
in India present complexities. In addition, the supporting eco-system
(in terms of Internet/ broadband penetration, number of electronic
banking customers, number of active credit/debit card users, etc) is
still in its nascent stage and needs to grow far more aggressively to
help the electronic payments industry grow to its potential.

From a global market comparison, the one remarkable aspect of the
Indian market is that cash is still the pre-dominant mode of payment;
consequently, customer-behaviour change in terms of adoption of
electronic payment modes will perhaps be a larger and a tougher task
in India as compared to most other markets globally.

You have tied up with banks and utility organisations. What is the
value proposition you offer them? And to consumers?

Offering a comprehensive electronic payment service to the customer
requires the arranging and managing of multiple thirdparty
relationships and the related technological and operational
complexities; this, by itself, can become a barrier to the building of
the electronic payments market.

Knowing this, BillDesk has created a shared, open platform that
consolidates and aggregates these third-party relationships and offers
a standardised platform to the banks, which could then focus on the
customer- facing aspects of the service delivery.

As a business, therefore, BillDesk serves as the single point of
interaction between multiple banks and institutions across the
country.

The BillDesk technology and service enables banks and institutions to
deliver efficient electronic third-party payment services to their
customers, while outsourcing the service management complexity to
BillDesk.

Today, BillDesk is India's largest bankcentric service provider,
providing and managing the service for over 40 banks and over 200
billing institutions. Our company manages these services across a
range of access channels viz. Internet banking, ATM banking,
telebanking, mobile banking, etc. The payment gateway services of
BillDesk enable customers to pay online using either their electronic
banking accounts or credit cards.

Outsourcing the electronic payment service management to BillDesk
offers banks/ billers established alliances, leading edge technology,
operational efficiencies, control of processes, and assurance of
service delivery. Importantly, it provides a single, centralised
interaction point for the bank and establishes a high degree of
standardisation for the bank's activities. Organisations don't have to
worry about developing the businesses processes, managing day-to-day
operations or multiple biller interactions; instead they simply focus
on customer management.

From an end-customer perspective, the BillDesk service enables them to
receive, review, pay and organise their bills and various other
payments online, in a secure manner, and through the channel they find
most convenient.

What, according to you, are the key drivers of growth in the
electronic payments industry? Also, what are the major challenges/
problems?

There is a whole eco-system that supports an electronic payments
transaction - right from the bank/financial institution providing
electronic payment facilities, the merchant wanting to receive
payments electronically, the underlying payments infrastructure,
customer having the necessary access and devices to conduct the
transaction and of course, the customer wanting to conduct the
transaction electronically.

This entire eco-system needs to move in tandem for the electronics
payment (EP) industry to grow robustly and upon a strong foundation.

Like any nascent industry, the EP industry too faces its initial
challenges (on all these fronts); equally, given the multiple players,
disparate technology platforms, legacy systems, different payment and
settlement mechanisms, there is a need for established standards and
uniform practices.

The key drivers for growth today, therefore, would be: (a) marketing,
aimed at building customer awareness of options and benefits; (b)
improvement in last mile connectivity; and (c) better customer service
by banks/merchants in respect of the electronic transactions.

How safe is electronic payment? We keep hearing reports of phishing,
hacking, cyber crime and so on!

Customer perception of security of electronic transactions is indeed a
very critical aspect of the growth of the industry; which is why we
believe that proper market education in terms of building customer
awareness is fundamental to the growth of this marketplace.

An electronic payment by itself is as secure as any other banking
transaction - what a customer needs to be careful about is to ensure
that he/she is conducting the transaction in a secure environment,
never parting with account-access details and not transacting at `high-
risk' sites! Generally speaking, compromise of customer account-led
information happens more in the `physical /offline' world than in an
online transaction. Compromise made in the `physical/offline' segment
is then typically used in the online space.

So care has to be exercised by the customer as much in the physical
space as in the online space.

Is the mobile space contributing to good volumes in electronic
payments? What are the constraints?

Not yet. The mobile payments space is still very, very nascent. It is
possible that customers are using the mobile device to access the
Internet and then make payments - but that is akin to an e-commerce
transaction with just the access device being different.

The market where a customer uses mobile-application and payment
mechanism resident on the mobile phone to initiate payments is still
in its infancy. Given the huge mobile users base, most constituents
hold the mobile payments space to be potentially very large. To an
extent this is true, as the basic `customer-base' is in place!

However, as a market, we are still yet to hit upon a good `use-case'
from a customer perspective; also, as for any electronic payment
transaction, there is a need for standards in the mobile-payments
space.

The key aspect (not a constraint) that will perhaps drive and
influence the mobile payments industry is the evolution of a good
business model acceptable to the various constituents (viz. the
operator, the bank and the service provider). All these constituents
hold the space to be critical for their own business future and
therefore there will be those tugs-and-pulls even before the industry
has evolved. Good collaborative models will perhaps hold the key.

From a customer use perspective, the critical aspect to address would
be the deployment of a universal payment mechanism which does not tie
in the customer to always use a specific payment mode, specific bank
or a specific telecom-operator. Also a large part (over 85 per cent)
of the mobile user base today falls within the category of a `prepaid
user' - about whom there is not much information available in terms of
the customer profile or customer preferences; addressing the needs of
this segment will bring with it its own challenges.

Where do you see big opportunities opening up in the near and medium
term?

We see the direct-debit to banks accounts electronically evolving as
the ideal way to make an electronic payment. This has multiple
advantages in terms of reaching out to the entire banking-customers
base immediately, lower cost of transactions and a higher transaction
assurance and non-repudiation.

As industry-vertical segments, all the existing sectors will see very
high growth; in addition, consumer payments to government might emerge
as a new big segment. Finally, depending on regulator will, policy
direction and evolution of a suitable model, electronic payments in
the IPO market segment and secondary-market segment could open up a
huge additional transactional base for the electronic payments
industry.

Are there clear insights about the patterns of payment behaviour of
Indian consumers and about where they are headed?

As an aggregator across all the key banks and large institutions in
the country, BillDesk holds an advantage in terms of getting a
holistic view of the electronic payments marketplace. There is a
significant information and analytics that has emerged with respect to
the customer payment behaviour, but if there is one key insight that
we have gained over the last few years it is that if a customer is
well educated about the electronic payment service options, he/she
definitely converts to the electronic habit!

While it sounds commonplace and commonsensical, it is amazing as to
how little an attention is paid to this aspect by many of the large
players. For example, electronic bill payments is a fundamentally new
business that will deeply impact the core `savings account' population
and be a key plank for customer retention for banks.

What global best practices are you integrating in your service? Also,
how are you leveraging IT?

Our business being `electronic payments and remittance' the entire
proposition is based on the leverage of IT platforms! The key driver
of our business is IT, we constantly leverage the extraordinary
potential of IT for enhancing our business competitiveness and
business performance.

BillDesk works with the largest banks and institutions in the country,
in offering its unified payments and remittances platform. Given the
complexity of the underlying platform and also the business
requirements of the key clients base (i.e. banks), BillDesk has
followed a philosophy of incorporating best-in-class standards into
all aspects of its technology, and operations and service delivery.

These range from the security standards adopted for processing online
transactions, standards for storage and use of customer account
information, for encryption, storage and movement of data, best
practices for routing and filtering transactions and for settlement
and transaction reconciliation.

Is there scope for reaching electronic payment service to those who
are financially excluded?

Yes there is scope - but given the expected customer profile,
demographics, accessibility of electronic channels in the relevant
manner (device, location, merchant aspects) one would have to wonder
about the adoption rates for such services. It would take a
significant amount of customer education efforts over a period of time
for this to work in a secure, efficient manner. So, given that, the
near term outlook for the electronic payment services being used
directly by those who are currently financially excluded is very low.

What is perhaps very likely is that in an indirect manner (viz.
through business correspondents, etc) the electronic payment and
remittance channels will get used to the benefit of this segment of
customers.

Can you talk about the takeaways from your Andersen days that continue
to be of value in your current work?

Prior to founding BillDesk, I worked with ITC Ltd for about nine years
and then with Arthur Andersen for about a year.

With ITC, I worked across a range of businesses, with a diverse set of
people (across functions, hierarchies, cultural profiles, etc) and
under diverse business and market-environment conditions (profitable
markets, unprofitable markets, competitive markets, monopoly markets).
As a training ground it was an incredibly valuable experience - in the
context of the learnings that I am able to apply in my current
enterprise. The depth of exposure that I gained across all the
functions of a full business - operations, HR management, finance,
marketing, legal, aspects of P&L and balance sheet management,
investor handling, customer handling, vendor relationship management,
brand and price management, shareholder management, dealing with
government agencies - was deeply enriching, and more importantly,
practical on-ground learning; not substitutable through any kind of
textbook learning or B-School grooming alone. All these aspects
essentially instilled a degree of managerial competence that has
proved vital in building the BillDesk enterprise.

The most wonderful learning that I have from my brief stint at
Andersen is that every individual in an organisation - no matter how
senior or junior - needs to be held accountable for the way they spend
their time at work; it holds the key to productivity and efficient
working of an enterprise!

Source: Business Line