01 Feb Payments Business – New Dynamics
Digital payments is evolving and rightly so from being business to essence. What existed as business, now stands as economic driver. And this driver now demands to be viewed much differently than traditional. This thus brings in the new dynamics. A field trip will tell you what good job we and regulatory agencies have done with regards to merchant education on digital payments. With recent push to bring down the cost of digital transaction for merchants, opportunities to surcharge or bundle the costs have been limited while low cost infrastructure in form of QR code acquiring has reduced entry barrier. Having said that, there is future promise of opportunities in cross sell, asset, float and interchange.
To realize the future promise early, need to put in efforts to bring larger merchant and customer base on the eco system is immediate and so is the opportunity. However the cost of customer acquisition, both payee and payer, and driving digital transactions today is still very high, demanding huge investments. With such low margins driven by recent MDR guidelines, interchange income does not and will not justify the ROI. In this new dynamics, payments can not be standalone.
At the same time as payments is evolving so are the instruments themselves. As more and more digital moves over the counter, currency is also changing form. Loyalty points, on the fly credit, revolving lines, crypto currency, barter, promise make for revenue opportunity for digital payments beyond MDR.
This new dynamics has created new opportunities for, at the same time necessitates, Service Providers, Issuers to collaborate and leverage for mutual benefit. Credit cards brought payment processors, payment gateways brought Aggregators, POS brought Merchant Service Providers, Mobility brought Fintech Issuers, this new dynamics is sure to bring a different avatar to the Payments space. Happy to be part of this new dynamics.