What are the hurdles in the path of creating a world-class payments ecosystem in India? - Innoviti

What are the hurdles in the path of creating a world-class payments ecosystem in India?


Widespread internet penetration, a slew of government reforms and sustained investor interest in payment space has led to a surge in digital payment adoption by consumers and merchants. Unified Payments Interface (UPI) has accelerated this adoption multi-fold as the simplicity and ease of use by both developers and consumers, unbottled many use cases. Growing at a compounded rate of over 50% year-on-year, digital payments got a further tailwind during the COVID-19 pandemic as consumers adopted touchless payments. 

While the growth has been rapid, the industry is still nascent.  Several structural and technological challenges such as cyber-frauds, transaction costs, communication infrastructure, awareness and adoption need to be overcome to bring about the true realization of the potential of digital payments. A deep dive into some of these throw up deep large problems that would require collective intervention by the industry.

  • Disputes of Small Merchants: Merchants, especially smaller ones, are wary of giving away goods and not receiving payments the next day, despite an SMS or paper slip confirming payment approval.  This stems from two causes, a) a lack of awareness around how digital payments work and what each electronic confirmation means, and b) cumbersome and time-consuming dispute management processes. Digital payment confirmations are usually received through SMS or printed charge-slips and are in English. Comprehension of written English in India is low in general and with the small merchant community even lower.  Moreover, to manage legal implications the content is usually technical in nature which makes it that much more difficult for merchants to understand.  Most players, whether banks or fintechs, resort to dispute management through phone calls or digital channels like WhatsApp and Email.  Since every payment transaction involves an acquirer (the bank that accepts the transaction), a network (Visa, Master, Rupay) and an issuer (the bank where consumer holds their account), determining the root cause behind any dispute is time consuming and complex.  Further, most merchants while agreeing to accept digital payments may not have read the fine print in their agreements wherein if the issuing and acquiring bank do not agree on the dispute, the merchant would need to bear the loss, with no easy way to get access to arbitration. For a small merchant who has limited time to chase disputes, this further reduces their trust in digital payments and moves them towards cash.
  • Substandard Internet Quality: India faces a major challenge in terms of last-mile internet connectivity.  The race to win the telecommunications battle has led to a price war between telcos, the impact being on service quality.  There is very little money left in the business for telcos to invest deeply into creating a quality network or service infrastructure. COVID-19 led to a huge surge in Internet demand and that has led to a further strain on the infrastructure. Unlike regular web browsing, payment traffic has specific needs such as low latency, low response time-outs and a need to connect modern TCP/IP based systems with legacy ISO systems. The result is time-outs, packet drops leading to a typical experience of a consumer getting confirmation of payment while the merchant has no confirmation.  In the absence of which the merchant cannot handover the goods, while the consumer having been debited has no easy way to get a refund.  This inconvenience discourages first-time consumers from adopting digital payments, especially for micro-payments. 
  • Cyber Fraud – India comes only second after the US in hacking attempts, reflecting the interest in the hacking community in India. While till date large scale data breaches have been limited, the overall security posture is nascent.  Inadequate investments into security technology and lack of awareness with people dealing with data in banks and fintechs are the primary reasons for this.  Historically it has been seen that most data breaches have a human lapse behind them.  A higher awareness of what may seem like an insignificant lapse, e.g. a piece of paper on which a password was written being torn and thrown into a dustbin, is needed to limit things going wrong.  A tightening of the enforcement infrastructure and quick disposition of cases with strict penalty would also help in creating deterrents. While the banking and fintech industry are working on ways to control this, cyber-criminals and hackers are evolving their techniques too. In such an environment, use of technology with a combination of awareness and stricter laws can help in navigating the landmine of security problems. 

All these problems are solvable if the industry decides to collectively work on doing so.  Interventions by the regulator with quality-of-service standards, service-based penalties and incentives for improving awareness will help in slowly, but steadily, enhancing the digital payments experience.

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    Credit card EMI uses your credit card limit to convert your purchase into installments. Suppose you make a purchase for Rs. 9,000 on your credit card and while buying select the credit card EMI option with a tenure of 3 months, then the bank instantly converts your purchase to three installments of Rs. 3,000. In the next credit card cycle, instead of paying Rs. 9000, you will need to pay only Rs. 3,000, and continue paying this for 3 months. A nominal interest or processing fee may be charged depending upon the various schemes running at the merchant.

    If you don't own a credit card and would still prefer paying in instalments, you can use your Debit card to make select purchases on EMI.  Your debit card bank may have qualified you, you can check the bank on the same by sending the following SME message to your bank:


    HDFC (Min value is 5 K)

    SMS MYHDFC to 5676712 from your

    Bank registered mobile number, or

    To check your pre-approved eligible limit

    give a missed call to 9643 22 22 22


    AXIS (Min value is 5 K)

    SMS DCEMI<Space>XXXX (last 4 digits

    of your debit card number) to 5616100


    Federal (Min value is 5 K)

    DC<space>EMI to 5676762 / 9008915353

    or missed call to 7812900900


    Kotak (Min value is 8K)

    SMS CDL<space><last 4 digits of your

    Debit Card No> to 5676788


    ICICI (Min value is 5 K)

    SMS DCEMI<space><last 4 digits of

    Debit Card number> to 5676766


    While making the payment, notify the store executive to swipe your debit card transaction in the EMI mode and select a preferred tenure. The transaction will get approved on your bank as per your qualification and converted into EMI for the number of months selected during the transaction.

    Buy Now Pay Later (BNPL) is like using a credit card or getting a loan and repaying in EMI. The only difference being that it is for an ultra-short duration of 15 days to 60 days.

    Merchant will get the money the next working day from the bank.

    Interest costs depend from case to case. For example, in: Zero cost EMI - Customer doesn't pay the interest cost Bank EMI - Customer pays 12 to 15% interest cost depending upon the bank. Buy now pay later scheme (15 days) - Customer pays around 1.16% interest, again depending upon the banks. Buy now pay later (30 days,60 days and 90 days) - Customer pays 2.33%, again depending upon the banks.

    Processing fee is the amount charged by a credit/ debit card issuer to process your customers loan booking. For example, HDFC Bank charges Rs. 199 as processing fee for both CC and DC EMIs.

    IMEI validation is done by entering the IMEI number into the Innoviti terminal which then gets validated by the brand for an authentic product being sold.

    IMEI validation is done for Brand EMI transactions.

    The offers could be on any brand, product, bank card, being offered on any specific dates or any specific SKUs

    SKU promotions start with the cashier scanning SKU, IMEI/ Serial number from the billing POS and entering the amount in the billing POS and then transacting under the "Brand EMI" tender mode.

    As SKU comes directly from the billing POS via scan, it reduces the errors and manual effort of selection to re-enter/select again from the EDC.

    Joint promotions are offers provided to consumers in which two or more parties are bearing the cost of the offer. It is a highly efficient mechanism to reduce the cost of marketing. Small merchants can benefit by getting their name associated with large banks and brands.

    Innoviti has used payments technology in unconventional ways to bring merchants, banks, and brands together and enable them to run joint promotions for their common consumers.
    Innoviti’s uniPAY Next and GENIE products can run instant cashbacks, EMI, upgrade offers and others with two or more parties bearing the cost of it.

    The MDR, or Merchant Discount Rate, is a fee paid by the merchant to its bank for accepting payments card payments. This is typically calculated as a percentage of the transaction value undertaken through credit/ debit cards.

    Merchants can negotiate with banks for better MDR rates. With greater scale, merchants enjoy better negotiation power. You can also reduce MDR using Innoviti’s sophisticated multi-bank routing technology in uniPAY Next.

    Innoviti's uniPAYNEXT multi-bank routing technology automatically routes every card swipe to the bank that will charge the lowest MDR for it.

    Innoviti’s uniPAYNext technology uses an advanced #LookAhead technology to instantly scan the store and bank networks and identifies the best route from the store to the bank to improve transaction reliability. It optimizes speed, cost & reliability based on merchant pre-set rules to select the bank.

    Mismatches between a merchant's daily sales bank card settlements creates unnecessary manual reconciliation work. Innoviti's uniPAYNEXT technology digitally adds the approval code and approving bank name to the billing system enabling automatic reconciliation.

    The reports can be seen on SPARCS, uniPAYNEXT's reporting portal. This comprises of some very useful information like daily settlement receivables from each acquiring bank, store sales by different card issuers or regions or payment tender modes opening new possibilities for joint marketing programmes.

    UPI stands for Unified Payment Interface (UPI), a technology created by National Payments Corporation of India (NPCI). It allows transfer of money from one bank account to another instantly via one's mobile phone. Innoviti supports UPI payment via any UPI app such as Paytm, GPay, WhatsApp Pay, PhonePe through its terminals. To know more, click here.

    You need a Sodexo card issued by your employer. You can use your Sodexo card to pay for your food & grocery purchase on any Innoviti terminal in your F&G store. To know more, click here.

    Innoviti supports all Visa, Master, Rupay cards, UPI, Sodexo, other meal cards, EMI, Buy Now Pay Later Plans and loyalty point redemption through debit cards of banks supported by Loyalty Rewardz.

    How can I get my shop name added to Innoviti’s advertisements on Google?
    Once you sign-up with Innoviti and your GENIE app is installed, your name will automatically get added to the advertisements. It takes between 4 to 5 days for the name to start appearing.
    How can I get my shop name added to Innoviti’s advertisements in banks?
    Once you sign-up with Innoviti and your GENIE app is installed, your name will automatically get added to the advertisements. It takes between 4 to 5 days for the name to start appearing.
    How does GENIE coupon work? On which banks is it applicable?
    GENIE coupon is an instant discount offered by Innoviti to every consumer whose payment is done on Innoviti’s mobile app by the merchant. Customers need to enter their mobile number in the app, they will instantly receive an OTP through SMS/ WhatsApp, entry of this OTP applies the surprise instant discount on the purchase value immediately.
    Example: If your purchase value was Rs. 10,000, and the coupon value is Rs. 500, then your charge-slip will be approved for Rs. 9,500. You save instantly. The merchant gets the full money.
    It is applicable to credit/ debit card holders of 100+ banks in India.
    Does wallet work on refurbished products?
    Yes. GENIE’s EMI wallet can be used to provide zero-cost EMI on refurbished, second- hand and upgrade plans.
    How can I get access to customers qualified for credit by banks?
    Banks work with aggregators to provide access to these customers. Innoviti is a leading aggregator which can provide you with a terminal that will connect to the bank and provide you access to these cardholders.
    In addition, Innoviti in coordination with the bank will promote your store to all the bank’s customers who are pre-qualified.

    Brand EMIs are joint promotion schemes used by merchants, banks, and brands to incentivize a consumer to buy a higher end-product than what they can afford. The purchase is converted into EMI instantly by the bank, with the interest cost being borne by the product brand.

    Innoviti has partnered with 100+ brands including Apple, Samsung, Vivo, Oppo to extend 1000s of such schemes.

    You need to be pre-qualified by your credit, debit card bank to be eligible for Brand EMI. The bank will typically look at your credit card and savings account history to qualify you.

    Innoviti’s technology instantly checks with the bank if you are qualified to approve your Brand EMI transaction.

    Does wallet work on unbranded products?
    Yes. GENIE’s EMI wallet can be used to provide zero-cost EMI on any unbranded electronics product like headphones, power banks, speakers, etc.
    How does BEAM work?
    BEAM (Brand EMI Acceleration Mission) offer gives merchants the option to get sponsored by one of the leading mobile brands that they represent. Innoviti has tie-ups with brands like Samsung, Oppo, Vivo and Xiaomi. Using BEAM, merchants get 1% extra margins on the sponsored brands and 0.5% extra margins on the rest of the brands