India four-way payment how to access: India third-party payment market analysis (I)

(i) Demographic profile: In 2016, our population reached 1.368 billion, ranking second in the world.

(ii) Total Economy: In 2016, India's Gross Domestic Product (GDP) reached US$ 2.6074 trillion, ranking sixth globally. According to World Bank projections, India's GDP growth rate is expected to remain at about 7.81 TP3T till 2019.

(iii) Policy environment:

Basic Information:

CURRENCY REFORM IN INDIA: On 8 November 2016, Prime Minister Narendra Modi, in a special televised address, announced the cancellation of the Mahatma Gandhi series of banknotes in the denomination of Rs 500 and Rs 1,000, which will expire after midnight, and the issuance of new Rs 500 and Rs 2,000 banknotes, with effect from 9 November. People can exchange the old currency for the new ones at banks. The move is aimed at abolishing notes used for financing terrorism and domestic money laundering and reducing corruption (cash hoarding), drug menace and smuggling.

Cashless Economy: The Government of India wants to transform India into a cashless economy in the next 10-12 years. To achieve this, the government has introduced measures such as Payments Bank and Bharat Bill Payment Services (Bharat Bill Payment Services) to encourage people to make payments for services and conveniences through mobile payments.

Unified Payments Interface (UPI) : In April 2016, the National Payments Corporation of India (NPCI) launched the Unified Payments Interface (UPI) to provide the public with a virtual payment account linked to a bank account, and the use of UPI-based payment apps has greatly simplified the payment process.

NATIONAL PAYMENT QR CODE: Building on this, the National Payments Corporation of India (NPCI) rolled out the National Mobile Wallet, BHIM, to the public last year.In March 2017, the National Payment QR Code was launched.

Problems exist:

Excessive government intervention in Internet innovation.

Indian fintech companies have to get payment licences like traditional industries.

The Reserve Bank of India has spoken out against deregulation of startups.

The mobile payment infrastructure is not yet complete.

(iv) Mobile Internet environment:

1. Online banking:

According to World Bank data, India has only 125,000 banks in a country with a population of over 1 billion. Nearly half of the population (47%) is unbanked and many Tier II and Tier III cities do not even have banks.

Problems exist:

Cash payments have become the main payment method for online shopping in India due to the extremely low penetration of banks and credit cards.

India has long relied on cash payments due to inadequate infrastructure.

2. Total Internet Users: As of 31 March 2017, India had 460 million Internet users with an Internet penetration rate of 34.41 TP3T and a growth rate of 9,142.51 TP3T.

3. Smartphone market:

According to the International Data Corporation (IDC) Quarterly Mobile Tracker report, the Indian smartphone market has maintained an annual growth rate of 14% to become the third largest smartphone market in the world.In 2017, total shipments reached 124 million units, the fastest growth among the top 20 global smartphone markets. India ranks second in terms of smartphone users with 530 million users. Excluding China, India ranked first globally with 148 billion hours of Android usage. India's Google Play shop also recorded the highest number of downloads globally at 6.2 billion, surpassing the US.

(v) Conclusion:

The Internet and mobile market in India started late and the infrastructure is still improving. However, with a large population base and rapid economic growth, the number of Internet and mobile subscribers is increasing year on year, making India a market with great potential.

Government policies in India have played a decisive role in the development of Internet finance. On the one hand, monetary reform policies have contributed significantly to the growth of online payments and credit; on the other hand, the government's implementation of a unified payment channel and restrictions on the issuance of banking licences have hindered the growth of third-party payment start-ups in India. It is recommended that third-party payment companies considering partnering with UN Payments establish partnerships with Indian banks and obtain the necessary banking licences.

(vi) Telecommunications operators:

Being the second most populous country in the world, as of May 2017, India has 1,249.8 million telecom subscribers.

1. Bharti Airtel:

Bharti Airtel is India's largest operator and a significant multinational telecoms operator in the developing world, operating networks in more than 20 countries and with over 300 million subscribers.Bharti Airtel was also the first operator in India to deploy a 4G network, and currently offers 4G services in 15 cities.

2. Vodafone and Idea Cellular:

Idea Cellular's subscriber base grew six-fold from 16 million in September 2016 to 117 million in May 2017 British telecoms company Vodafone announced on Monday that it had agreed to pay $23bn to merge its subsidiary in India with Idea Cellular, the country's third-largest telecoms provider, to create India's largest communications provider.

3. Reliance Communications

4. Jio

Jio entered the market last year with a free model, marking a major change in the Indian telecom market. The six-month free model earned Jio 108 million subscribers, with 67% (about 70 million subscribers) switching to paid subscribers at the end of the free period.

(vii) Five major Indian banks:

1. Central Bank of India: The Central Bank of India (CBI), a state-owned bank owned by the Government of India, is one of the oldest and largest commercial banks in India, with its headquarters in Mumbai. The bank has 4,100 branches in 27 states and 3 union territories in India and 270 branches overseas.

2. Union Bank of India: The Union Bank of India was established on 11 November 1919 and is headquartered in Mumbai. The bank's sources of credit include cash, savings, fixed deposits and overseas refinancing and borrowings. The bank has over 24 million customers.

3. Indian Overseas Bank (IOB): a service sector company providing commercial banking, retail banking, foreign exchange and money market operations.

4. Clearing Corporation of India: The Clearing Corporation of India is unique in its market design. It has successfully combined exchange trading and centralised netting in the over-the-counter market by updating contracts, providing members with multilateral netting services for funds and bonds, and strictly controlling risks at all levels. This is a good reference for the development and construction of China's financial market.

5. United Commercial Bank of India: The United Bank of India was established on 11 November 1919 and is headquartered in Mumbai. The bank's sources of credit include cash, savings, fixed deposits and overseas refinancing and borrowings. The bank has over 24 million customers.

(viii) E-commerce platforms:

1. Background:

The Indian e-commerce market is in a growth phase and has developed rapidly in recent years. According to Euromonitor data, the Indian e-commerce market reached $21.65 billion in 2016, ranking eighth globally and accounting for 1.9% of the global e-commerce market. online retail accounted for 4.1% of India's retail market, which is at a medium level among emerging markets, and there is a large room for improvement compared with developed countries. Thanks to the rapid popularity of smartphones, India's e-commerce market has been growing rapidly since 2014, with a growth rate of 80.9% in 2016, ranking first among the world's top twenty e-commerce markets.

2. Flipkart:

Flipkart is India's largest e-commerce platform and a representative of local e-commerce businesses Indian three-way payment company. Founded by two former Amazon employees in 2007, Flipkart started by imitating Amazon's online book sales model and later expanded to other products. Its model is similar to Amazon and Jingdong, focusing on building a sales logistics system.In 2016, Tencent Holdings, Microsoft and eBay jointly invested $1.4 billion in Flipkart, and Softbank invested about $2.5 billion in Flipkart in August.

3. Snapdeal

4. Amazon:

Amazon is taking the Indian market very seriously. After encountering resistance from Alibaba and Jingdong in China, Amazon has chosen to focus on the Indian market.

Amazon officially entered the Indian market in 2013 and reached a market share of 12.11 TP3T in 2016. although Flipkart's market share is larger than Amazon India's, its overall performance is not as good as the latter.

5. Paytm Mall:

In March 2017, Alibaba Group further invested in its subsidiary e-commerce platform Paytm E-commerce and acquired a controlling stake in the company. As India's largest e-wallet platform, Paytm borrowed Alibaba's model of expanding from 'payments' to 'e-commerce', One97 Communications separated its e-commerce site from its payments business to form the One97 Communications separated its e-commerce site from its payments business to form the Paytm E-commerce Company and launched Paytm Mall, a shopping app with 140,000 sellers and more than 68 million products across electronics, consumer durables, furniture and fashion. Leveraging Alibaba's strengths, Paytm Mall entered the cross-border e-commerce space, introducing billion-dollar products to the Indian e-commerce marketplace, creating a competitive edge against Amazon and Flipkart.

(ix) Conclusion:

In terms of third-party payment channels, the banking, telecoms and e-commerce industries have formed a monopoly pattern. Currently, India's representative third-party payment platforms have established partnerships with mainstream Indian banks and carriers.Flipkart, as India's largest e-commerce platform, has a strong consumer user base that supports its derived e-wallet business, making it a potential partner.Paytm's model has expanded from payments to e-commerce, and despite entering the e-commerce market late, the presence of well-known products as well as the Alibaba's technical and business support could help Paytm enter the market in a shorter period of time. Other third-party payment platforms that have partnerships with Snapdeal and Amazon could also be considered.

What are the three party payments in India