Digital payment giants Mastercard has tied up with Axis Bank and French payment service provider Worldline, to bring the functionality of Point of Sale devices onto Android smartphones of small merchants in India while also providing store owners value added digitisation services.
The aim is to expand acceptance infrastructure for contactless card payments in the Indian market by reducing costs of physical deployments by replacing swipe machines with an application on their NFC enabled smartphones, senior executives from these companies told ET.
The card network provider along with private sector lender on Thursday announced the launch of the app that’ll allow for subscription-based services such as digital onboarding, payment acceptance and digital accounting services on a single interface for small merchants. The app will also allow small businesses offer online services to neighbourhood customers; a functionality integrated onto the app by SaaS player Zoho.
The move comes at a time when leading digital payment and e-commerce players such as Amazon, Google, Paytm and Jiomart have been aggressively stepping their fleet of digital services to capture the capture the highly unorganised offline to online (O2O) retail market in India.
“What differentiates our product from other players is that it is world’s first comprehensive soft-POS with end to end digital solutions,” Rajeev Kumar, senior vice president – market development, South Asia, Mastercard told ET. “Our aim is to expand the acceptance infrastructure from the current 7 million merchants to 10 million merchants in the next two years.”
To be sure, the application allows Android devices enabled with Near Field Communication (NFC) technology to accept payments without the need for a customer to swipe the card. Furthermore, a customer can make a payment for less than Rs 2000 at a soft POS merchant simply by tapping the card at the back of the merchant’s phone without entering the PIN.
“Nearly 85% of all card transactions are below Rs 2,000. Currently we are seeing that about 15% of all card transactions are being made using contactless modes,” said Kumar. “In the three months of covid-19 lockdown we have seen a 2-percentage point jump in such transactions.”
Meanwhile, an Axis Bank executive said that the product has been launched with an aim to expand payment acceptance infrastructure by removing traditional cost-based hurdles faced both on the bank and the merchant side.
“It’ll decrease the capex for banks deploying bulky swipe machines and remove monthly rental liabilities for merchants. These were two biggest factors creating impediments affecting deployment of terminals in India. This solution opens up the pyramid for us to expand our market,” said Sanjeev Moghe, EVP – head cards and payments, Axis Bank.
Moghe explained that the product is primarily aimed for merchants with monthly turnover between Rs 10 lakh and Rs 40 lakh. “Rs 20-30 lakh turnover merchant is the sweet spot for us. While conditions may change, with our 4,500 branches, we would aim to deploy the product at around 1 lakh additional merchants by the end of the fiscal which would be about 15-20% of our target for merchant acquiring target.”
The partnership dynamic will be such that Axis Bank will acquire merchants, Wordline will provide the technology expertise and Mastercard will power these transactions. The product also dovetails with requirements of Indian lenders seeking transactional data to improve underwriting efficiency to expand loans to the credit hungry MSME sector.
“In India the lending to SME is restricted not because of limited intent but because of limited knowledge. Earlier a bank would only have the digital payment transaction record of a merchant, but the accounting functionality of the app also allows us insights into cash-based transactions made at the store as well,” said Moghe.
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