What should merchants evaluate when offering a payments mode

The last few months have been a whirlwind for digital payments in India. The government’s decisive move to scrap the currency denominations of Rs 500 and Rs 1,000 has had many immediate and long-lasting consequences. A hitherto problem of the payments landscape was the low number of merchants that accepted non-cash payments. One of the key objectives of demonetization was to accelerate the penetration of digital payments across the country.

Since then, there has been a marked increase in the merchant establishments that accept digital payments, from vegetable sellers to grocers and restaurants. Correspondingly, customers are also spoilt for choice with numerous digital payment instruments like wallets, cards, UPI, USSD etc. Thus, merchants must adopt more payment methods so that customers can pay through whichever method they prefer. However, while many merchants have started offering multiple digital pay modes, they must evaluate certain parameters before doing so.

1. Features– Naturally, each payment system has its unique characteristics. Card payments have been around longer and are expected to evolve slowly vis-à-vis newer methods. Newer entrants like Wallets, UPI, USSD and AEPS are expected to enhance their offering continuously in order to remain relevant and be adopted across segments. They focus on convenience, security and the ability to operate with different connectivity technologies.
2. Security– This is an important concern for merchants, especially those making the transition from ‘only cash’. One must look for scheme services like Verified by Visa, MasterCard SecureCode and RuPay PaySecure. Payment methods also follow industry compliance standards like PCI-DSS and EMV. One must be aware of new security threats surfacing from time to time and know what to do when facing one.
3. Convenience– Any payment method should be simple for the average consumer to understand and use, without compromising security. It should be easy to register for, and to download/install the required elements. Completing the transaction should not take more than a few seconds.  Also, it should be easy to access and navigate, both for the customer and the merchant.
4. Cost– Every payment instrument, including cash, has a cost. The cost of cash is high but unseen compared to other methods. Digital instruments have a cost known to, and shared by, the merchant and other parties. Some of them even offer discounts and cashback incentives for faster trial and adoption.
5. Technology– Payment technology evolves continuously and every day, we witness more sophisticated features, innovation and security measures. It is not necessary to always choose the avant-garde as every payment method has its own consumer segment and all payment instruments co-exist in the same ecosystem. One must evaluate the reach, connectivity and service associated with a pay mode.
6. Acceptance
   – New instruments must be adopted by a sizeable consumer segment in order to sustain. Not every payment method is accepted by consumers. For instance, India had leapfrogged the adoption of pagers and directly adopted mobile telephony, and at an unprecedented scale. Similarly, one needs to know methods what his consumers use and prefer in order to pay.

— by Gulshan Pruthi, Vice President, Sales & Marketing, Worldline South Asia & Middle East