Aman Ahuja, Vice President, Product Management, South Asia, Mastercard in an interview with Saibal Dasgupta and Himali Patel explains how a large majority 77 per cent consumers in India believe the shift to contactless payments is here to stay

Owing to the lockdown, digital transactions have seen an uptick. How have things been for the sector in the period following the lockdown?

With the lockdown, there have been innumerable ways in which consumer behaviour has evolved and adapted to these unprecedented times. We have seen that while digital payment volumes declined in sectors like aviation, tourism, hospitality, hotels, entertainment, e-commerce (non-essentials) and restaurants, there is also an uptick in areas like online grocery stores, online pharmacies, OTT players (telecom and media), EdTechs, online gaming, recharges and utility/bill payments.

Has the industry seen any interesting consumer trend during this period?

Companies are converting their customer’s journey from physical channels to end-to-end contactless operations and this is one trend that I see picking up. In fact, a report by local circles mentions that 42 per cent of Indians have increased digital payments during the lockdown, bringing a lot of first-time users, who were not tech-savvy, closer to the digital payment’s ecosystem.

According to recent research conducted by Mastercard as COVID-19 alters our daily lives, consumers in India and across the Asia Pacific are rapidly going digital with purchases of everything from groceries to movies in a shift that looks set to become a permanent habit after the pandemic passes. Shopping in India has also shifted to online as 86 per cent of people feel that hygiene concerns are here to stay.

We are witnessing highest standards for safety and security of digital payments. We strongly believe that there is an imperative opportunity to protect the digital ecosystem in these difficult times.

Have you experienced any reduction in the transaction and by what percentage?

As I mentioned earlier, volumes have declined in sectors like tourism, hotels, clothing, restaurants but there has also been growth in many other categories. Overall, less commerce is happening post-Covid lockdowns and hence there has been a decline in transactions viz last year. However, what we are also noticing is that every week is better than the previous week and the digital transactions are bouncing back significantly. Indian economy is very resilient, and we will start seeing overall growth in the next few weeks.

What is also interesting is that there are certain categories which have become a new normal. Between February and March, tap-and-go transactions in Asia Pacific grew 2.5 times faster than non-contactless transactions in the grocery and drug store categories. We conducted a survey in April which showed that 79 per cent of people worldwide and 91 per cent in Asia Pacific were using tap-and-go payments. Citing safety and cleanliness, 74 per cent of people globally and 75 per cent in the Asia Pacific said they would keep using contactless payment methods even after the pandemic is over. Furthermore, the Indian market is expected to have over 50 million contactless cards by 2020. While contactless payments were already seeing a steady growth in the last 18 months, Covid-19 has only fast-tracked its adoption.

Have you witnessed a rise of credit card defaults in the current times?

Govt has provided a moratorium for credit card repayments thus providing a cushion to consumers. As we see that markets are starting to bounce back, we do not expect any significant increase in defaults. Having said that, issuers have more insights about credit card defaults in current times, and they would be the right people to comment and substantiate with data.

How is the industry preparing for the post-COVID world, and what innovations payments industry can expect in the future?

Certainly, COVID-19 has increased consumers concerns about cash usage and led to positive perceptions about contactless due to the safety and peace of mind it provides. Most consumers globally view contactless as the cleaner way to pay (80 per cent in Asia Pacific) and this is eventually being adopted in India as well. We are witnessing a lot of innovations lately to prep up for the post-Covid world. We are advocating and providing an end-to-end digital approach that will assist banks in acquiring customers digitally.

Consumers today look at Instant gratification, safety and security and best in class experiences and our endeavour is to provide all those in every step of consumer onboarding or payment journey. Mastercard is the only International Network enabled for Aadhaar-linked eKYC in India, that can facilitate instant issuance of credit card and eKYC for all users. Through Mastercard ID Check Express, we enable instant checkout for e-commerce purchases without OTP. This is a quicker way to pay and is valid for amounts up to Rupees 2000. Through Mastercard Send, we enable instant cash backs or refunds on offers and returns, to any card.

Penetration of credit cards is still very low in India. How do you see it growing in the coming years?

Digital payments in tier 2 and 3 towns have grown 2.5 times faster as compared to metros. Emerging cities (those with populations of less than 1 million) in India are expected to be the fastest-growing and will constitute about one-third of total consumer spending by 2025.

While the credit card market in India is small when compared to a debit card, the market trend is anticipated to change. In India, the credit card user base is 58 million as on Apr’20 and the market is expected to grow at a CAGR of more than 25 per cent during 2020-2025, on account of the rising the popularity of credit cards and growing trend of purchasing products first and paying later.  The increasing usage of credit cards in the country highlights the rising aspirations and spending power of Indians. It also suggests that the urban-rural divide in the country (in terms of digital habits) is bridging rapidly.

Do you think mobile payments and bank-linked e-commerce system would impact the market and usage of credit cards in India?

The divide between physical and digital is completely fading away. Today you can tokenize your card credentials on the mobile wallet and make contactless transactions through your mobile phone at the point of sale or pay using a QR code from your mobile banking app or pay for your e-commerce purchases through your mobile. A credit or debit card today can take any form factor of payment depending on the consumer choice and convenience. Mobile-based payments are gaining popularity and we have all the right products and services to offer mobile-based payments with the highest levels of safety and security standards. Consumers look for exclusive offers, rewards points, discounts/cash backs, or interest-free EMI’s and credit cards provide customers with money-saving options and allow easy and instant credit in times of need.

With over 1.3 billion population, the market is large enough for all digital payment channels to make a meaningful contribution to the “Digital India” vision of the government.