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Democratisation Of API Economy: Sans Monetisation

India is poised at the beginning of a new era in payments that is set to welcome innovative solutions such as third-party wallets, token that will replace traditional credentials, and the use of biometrics as an authentication tool

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Over the past two decades, India has pushed hard to become a less-cash society.

Though, we have made significant financial inclusion advancement in the past two years, but cash is still presiding. The payments sector in India is evolving fast, offering customers with choices of galore to make payments by integrating it well with mobility (smartphones, apps), cloud computing (API unmasking) and social platforms evangelization.

Financial technologies (FinTech) are disrupting consumer wealth by providing them better access to spending, credit and investing information and thus helping they make rational decisions. Hereby bringing payment proximities for innovative transactions in the digital platform which can rapidly change the way customers are transacting.

Decentralized digital currencies will play a pivotal role in maintaining a variety of options for people who need to monetize their transactions. It will be reshaped by technology and redefined by regulation, the emergence of new economic powers, and changes in the global currency landscape. Most importantly, payments will be refocused from a commoditized proposition to a strategic, value-adding solution; one that is offered with greater focus on the broader commercial and transactional context within which a payment (or a transfer of value) takes place.

Besides transformation, there will also be major convergence: 1. convergence around products and solutions linked to payments; 2. convergence around technology platforms that will be increasingly global in nature; 3. convergence around the operation of global securities and currency markets; and 4. convergence around regulatory regimes that today are often fragmented.

Accelerating growth and adoption of Digital payment in India

Large technology and social media companies such as Amazon, Google and Facebook have already started seeking entry into the payments market. At the same time, new electronic currencies such as Bitcoin offer payment options with advanced security. If such firms can leverage, even monetize, their considerable customer reach by presenting attractive, and secured payment propositions alongside their other non-payment offerings, they could succeed in disintermediating banks, particularly in growing segments of the global payments business.

Demonstrating the effectiveness of digital payments for high-frequency low-value transactions will compel more and more mobile users to install App-wallets. A rapidly growing FinTech sector - has the potential to dismantle barriers to digital payments. All these developments provide India with a unique opportunity to leapfrog and move quickly to a digitally enabled payment system.

Taking advantage of these kinds would help India meet its objectives of promoting financial inclusion. Mobile payment service providers and banks need to work together to create a seamless ecosystem for the technology to work efficiently.

Transformative power of technology

Though the internet carries the level-playing field for small businesses with limited marketing budgets and expertise, lot of them have faced challenges in getting their customers up and running, thus stamping upon their possibilities for monetization, recurring revenue, subscription or usage-based services.

The trend towards integration has been steadily accelerating over the years. It is driven by increasingly sophisticated ecosystems and business processes that are supported by complex interactions across multiple endpoints in custom software, in-house packaged applications, and third-party services (cloud or otherwise).

The growth of APIs stems from an elementary need: a better way to encapsulate and share information and enable transaction processing between elements in the transparent manner. Data and services are the currency that will fuel the new API economy.

What we're seeing is disruption and, in many cases, the democratization of industry. Entrenched players in financial services are exploring open banking platforms that unbundle payment, credit, investment, loyalty, and loan services to compete with new entrants such as PayPal, Tilt, and Amazon that are riding API-driven services into the payment industry. Netflix receives more than 5 billion daily requests to its public APIs. The volume is a factor in both the rise in usage of the company's services and its valuation. Many in the travel industry including British Airways, Expedia, MakeMyTrip, and miscellaneous have embraced APIs and are opening them up to 3rd party service providers.

Technology adoption, the interoperability of infrastructures across markets, and the increasing engagement of non-bank providers will combine to enable the creation of global payments platforms providing 24/7 service on a near real-time basis, across multiple currencies, geographic regions and markets.

Digital consumer payments are evolving rapidly-from the traditional "cash / card /cheque model" to "online single closed models" to "mobile multichannel, open and fragmented models" to the "Internet of Things (IoT), multi device, social models" and beyond. Fragmentation will continue and will differ by channel (POS, e-commerce, m-commerce and in-app). Most players will vie for domination at the POS which will see significant activity.

We are poised at the beginning of a new era in payments that is set to welcome innovative solutions such as third-party wallets, token that will replace traditional credentials, and the use of biometrics as an authentication and authorization tool. Ubiquitous connectivity, biometrics, tokenization, cloud computing, and IoT are just a few of the digital trends that will affect the way consumers transact and interact with their payment partners.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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mobile payment FinTech technology banking

Rahul Goswami

With experience across leading IT organizations, Rahul Goswami is a Bengaluru-based columnist and a certified consultant in sales & marketing advisory services. He is also a member of 'Academy of American Poets' and loves to explore his poetic writings to drive creative transformations in his works

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