Interview with Mr. Sunil Khosla, President, Digital Business -India Transact Services Limited

India Transact Services Limited (ITL) is an omnichannel merchant payment solutions company that innovates to make the transaction process as simple as it could. It owned by AGS Transact Technologies that further deals in providing end-to-end payment solutions with core operations in Banking Automation Services, Banking Payment Solutions, and other Automation Solutions.

In short, they provide Device-based solutions, Deviceless solutions/ Digital wallet and
Loyalty program & VAS.

Recently, we had an email interaction with Mr. Sunil Khosla, the President, Digital Business – Retail of India Transact Services Limited (ITSL). To know more about the market situation and how the ITSL is transforming the payment world in India.

Let’s have a glimpse of Mr. Sunil Khosla’s professional journey.

Mr. Sunil Khosla Head Digital Business India Transact Services Limited
Mr. Sunil Khosla, President, Digital Business India Transact Services Limited

Apart from ITSL, he is also the Chief Marketing Officer of ITSL’s Holding Company i.e. AGS Transact Technologies Limited (AGSTTL). He has been associated with ITSL since September 10, 2015.

He holds a Post Graduate Diploma in Business Management from Apeejay School of Marketing, New Delhi, and the Advanced Program in Sales and Marketing Management from the National Institute of Sales. He has approximately 19 years of experience in sales and distribution. Prior to joining ITSL, he was Chief –Sales (CP – MNT) at Pidilite Industries Limited. He has also worked with Max New York Life Insurance as Assistant Vice President – Distribution and Danone BOP India as Head – Sales & Distribution.

Mr. Khosla has also worked with ITC Limited. He has represented ITSL at the Retail Technology Conclave 2018 and at India Retail & eRetail Congress 2018. He has also been recognized as one of the Greatest Marketing Influencers 2018 by CMO Asia. Mr. Khosla has been awarded the “Young Digital Person of the Year” award at the Digital Customer Experience Summit 2019 by Zendesk. He has also represented AGSTTL as a panelist at and as an industry speaker at the Innovation Bootcamp 2019 organized by Transformance Business Media; and has also participated at the Retail Leadership Summit.

Now, let’s see what we got to know from him…

  • What according to you is the potential of digital payments in a country like India?

As India is projected to become a $ 5 trillion economy by 2024, digital payments will also grow simultaneously as it has a great potential to drive the country towards a cashless economy, matching the Government’s stride. Digital payments saw a boom post demonetization. But, in India, both cash and digital are growing at the same trajectory which means nobody is eating into anyone’s share, so with a growing economy, the benefit will be delivered to both. At present, there are around 30 million merchants in India out of which not more than 2.5 million are digital POS merchants. There is a huge scope for growth in the number of these merchants. Digital POS is another emerging trend that is being actively explored by e-commerce giants and will impact the cash-on-delivery model and replace it with digital transactions in times to come.

Per capita, digital payment consumption, which currently stands at 22 transactions per capita in a month, is expected to grow to 220 transactions in 3 years, and in terms of value, the projected growth is 2X to 5X. From 100 million active users, it will probably rise to 300 million in 3 years. If we see the growth chart of developed nations, their numbers are very high, however, India has just started its journey. India may adopt a technology late, but the speed of adoption and application is really quick like the success of UPI. Compared to the population size, our growth rate and volume tell us that we are very secure. India, being a slow starter, will catch up very fast to match the pace at the global level.

  • We have seen that the volume of online payments skyrocketed during the period of demonetization 2016. People hardly had any choice than opting for digital payments. What should be the strategies, according to you, by the government, and the merchants to again push up digital payments?

Post demonetization, the government has done multiple rounds of incentivizing digital payments. Several measures such as the recent CBDT mandate have been initiated and there is a lot more the Government can do. Currently, digital payments are not linked to tax benefits, a move expected from the Government soon. Though it is not an easy solution, if it happens, it would be a great push both for users and merchants.

From a merchant perspective, the use of digital payments is already being encouraged by the corporate sector and the results are great especially in the urban areas. Talking about the banking sector, the push towards digital payments is quite visible & is actively encouraging digital payments.

Sectors like petroleum are deriving a lot of benefits from digital payments. The discounting solution further helps them lure more customers and build loyalty. However, the mass retail sector is largely dependent on customers pushing digital payments. In the current Post COVID scenario, the merchants pull will further increase & there would be a spurt the way we say post demonetization.

  • What is the scenario of online and digital payments in semi-urban and rural parts of India? Do you think, in the near future, they will also prefer the digital mode of payment over cash transactions?

Though there is no specific data on the adoption of digital payments in semi-urban or rural areas, it is gradually growing in these parts of the country. There seems to be a huge potential for the adoption of digital payments among rural customers, in parallel with urban. This can be largely attributed to the disintermediation caused by technology. The penetration of smartphones and affordable data packs, which is close to 52% and 20% respectively, are driving the growth which is further pushed by UPI. Additionally, the widespread presence of bank branches and cooperative banks is delivering a lot of benefits to rural or semi-urban areas.

Soon we will reach a stage when everyone in the country will have access to some form of digital payment. The movement has already started. For improvement, the government should continue focusing on payment infrastructure, for instance, easy accessibility to low-cost data packs. Benefits especially targeting the rural population, such as introducing tweaks to the offerings to promote awareness and adoption among rural customers, aimed at addressing the key challenges they face, and slight changes in regulatory policies would be greatly impactful towards the expansion of digital payments and financial inclusion.

  • Why do you think, empowering the merchants is the key aspect of making the digital mode of payment, a success?

Digital payments came in India almost 20 years back. However, it grew at an unprecedented pace only after demonetization. The recent situation due to COVID-19 will also play a big role in driving the growth of digital payments. Merchants these days are well aware of the significance of new modes of payments and there is self-inclination towards the adoption of digital payments.

Yet, there are a few factors that make merchants reluctant. The major one is the cost attached to digital payment acceptance which includes the cost of PoS machines and transactional cost, among others. Several measures have already been introduced to do away with the problem such as incentivization schemes and cost-effective machines with affordable commercial plans. In fact, in today’s world, there is a lot that the digital payment portfolio offers to the merchants and enables them to earn. There are also loyalty programs for customers that trigger sales. Merchants today are smart enough to evaluate the cost and benefits involved. Additionally, consumers themselves will also push merchants for the adoption of digital payments.

  • Digital payment is one of the easiest and seamless modes of payment. But still, certain small merchants are reluctant to receive payments digitally. Why do you think they are reluctant, and how at India Transact, you take steps to make them less reluctant to digital payments?

Broadly, the belief among the merchants that there is a huge cost involved triggers the hesitance and reluctance among merchants for the adoption of the digital payments system.

Though the benefits outweigh the cost, the realization needs to be pushed. Training the merchants to build trust in the system is required.

India Transact has pan India presence. Our sales team across the country is reachable to each of our customers even for the smallest issues. We have different commercial models for rural and urban areas to ensure flexibility and our focus is on building up infrastructure across geographies. We prioritize training our customers, either through our mobile application or our team. We have invested heavily in technology. Our customers have access to our post-on-boarding app “Paytrack” which helps them understand and keep a record of each of their transactions, thus, doing away with the need to call customer care all the time. The app can be assessed anytime by multiple users.

  • What is the potential of SMS-based payments in India? Can they be as popular as digital payments using UPI or other payment methods, considering that most of the tech-savvy users opt for making personal online payments?

There are different types of mobile payments with functionality revolving around multiple factors. One option is an offline payment where a customer goes to a merchant and makes payment by swiping the card on the POS machine or by scanning a QR code. The other is online payment such as the one you make through an online wallet, debit/credit card, or any such medium on e-commerce sites.

SMS payments are the ones where you pay for products or services via a text message. The merchant sends you an SMS link while you are sitting at home which leads to a payment gateway. The usage is high in the service-oriented industries like delivery-based restaurants and salons that ask for advance payments. The payment system will rise but only in selected segments. SMS payments were one of the most popular methods of using mobile phones to pay for goods or services & now in the new normal of social distancing, Remote SMS based payment will become more popular.

  • What policies, according to you should be changed or implemented by the government or RBI to make online and digital payments, a win-win situation for customers, merchants, as well as the payment service provider?

The government and the RBI are already taking tremendous measures to boost digital payments. Enough measures have been taken to ensure customer protection from risk and fraudulent transactions. To safeguard customer’s interest and ease the transparency, refunds have been made faster.

However, stability around policies and regulations is required. Whatever policy is laid down must stay for 2-3 years because it takes months to make changes at the back end, which is quite cumbersome for payment aggregators and even for banks.  Additionally, the commercial interest & stability of PSP’s (payment service providers ) & other allied Fintech’s needs to be safeguarded.

  • What strategies does India Transact have from time to time, in order to be ahead of the competition? How tough, do you think the competition is when it comes to payment platforms, which is kind of an oligopoly market?

This is a big industry, however, the penetration is still slow. On the one hand, there is the banking industry and on the other, payment aggregators. Even the banks are majorly synergizing with payment aggregator platforms like us as a very few have their own.

Our prime focus has always been on building everything in-house. Hardly any organization in India has this kind of end to end capabilities. We have a specialized direct sales team for MSME’s & a corporate sales team for  B2B customers and a unique distribution channel pan India specifically catering to the mass retail segment & ensuring our reach to Tier 2 & Rural markets. Our 500+ channel partners are present pan India across different geographies, covering more than 2000 cities. We also have an Experienced team leading our robust banking channel, where we work with nationalized banks and also focus a lot on cooperative banks which help us reach distant corners of the country. We believe real financial inclusion is driven by the respective branches of each bank. We have a go-to-market approach wherein we have segmented the country into 372 sections s and each geography is consistently managed by a section in charge. We are a single stop shop for all our customers with complete in-house capabilities.

In the present scenario, it is tough for any new entrant due to the entry barriers, gestation period &  also the complexity of building complete infrastructure.

  • I have seen that certain major payment providers credit the amount to the customer’s account after 5 to 10 days, and sometimes, a customer have to wait even more, if the transaction fails, and the amount is debited from the user’s bank account. This is one of the major dissatisfactions from the user’s perspective. Why do you think, these payment companies take so long to credit the amount? Is there any valid reason behind the same?

There has already been a lot of improvement in terms of stricter norms and favorable measures for customer protection and safeguarding customer’s interest. When we talk about erroneous transactions, it can be either in the form of double transactions i.e. amount debited twice for the same transaction or failed transactions. Refund in case of double debit has already become faster with some companies even crediting the amount the same day. However, in case of fraudulent transactions, there has been improvement but it still takes time as the system needs to validate the transaction requires deep checking, supervision, and due diligence by the acquirer or bank or any other authority involved. It will still take a long time as the process cannot be eliminated.

  • I have seen, India Transact has a rich clientele that includes a few of the most renowned companies in India, including some of the major public sector banks. What steps do you take to maintain customer satisfaction?

We have a channel-specific team for all our channels which brings expertise. We have our own service team and for certain bigger clients, there is a dedicated relationship team that takes care of overall engagement with them. We prioritize customer satisfaction; therefore, we have set processes in place to understand customer’s pain points and provide customized solutions to them. In some cases, we even customize our post-on-boarding app “Ongo Paytrack” for certain clients.

Additionally, we have rigorous complaint handling and follow up system. There are stricter norms at all levels of the organization and everyone from junior to senior level gives key significance to ensuring that customer complaint is resolved on time and things are streamlined. We ensure that the system runs 24*7 & the team is available round the clock.

  • Do you think that the amalgamation of several public sector banks from 1st April 2020 will have any impact on the digital payment ecosystem? What can the major impacts be, and will it be a challenging aspect to tackle this for India Transact?

The consolidation is a good step for all banks. It will further help in strengthening the system and make it better. If there are 20 banks, there are 20 different ways to work which requires customized systems and different plans. When there are fewer bodies, it brings uniformity in terms of the overall approach to any business be it ATM or digital payments. Merchants will also benefit as there will be a pool of money or a pool of good practices. The reach will also enhance in terms of accessibility for customers. Combining different skill set of people across banks will eventually help both banking and digital payment ecosystem. With or without consolidation, we have been working with many of these banks for different tech solutions for the last many years.

  • India is a developing country, and most people don’t know a lot about digital payments. A few of them are even afraid of making digital payments by seeing people are duped by scamsters through online payments. What steps do you think, should be taken to make people more literate about online payments?

As I said earlier, a lot of improvement has already been done over the years and the government is continuously striving to make the environment even better. Efforts should be taken to educate the customers and make them aware that digital payments are a safe option and explain its usage and working to them. We need to build trust and reliability among customers, trigger faster refunds, more transparency and more government policies and regulations around it to strengthen the system. Government push alone won’t work, in fact, corporates like us should also take responsibility to ensure that all customers feel safe and secure while using the new payment modes. Offline mobile payments including QR code and UPI are safe and secured. The issue majorly persists in online transactions. That is where we need to take measures at an industry level to safeguard customers.

  • Do you want to venture out and expand your business in other domains?

We already have few things lined up but it is either directly linked with digital payments or digital ecosystem which we provide as one-stop-shop to the merchants. For example, more small merchants need a working capital loan. We do not directly provide a loan, but we facilitate it through our partners via our POS machines including timely loan payments through transaction mode. Other expansions are happening around more value-added services for the merchant which will enable him to earn through our platform & also have better consumer engagement. We also have interesting plans for direct engagement with Consumers. We will also continue to build our Ongo Loyalty program & Ongo Billing solution which further empowers Merchants & helps the last mile-consumers

  • What suggestions do you want to give to entrepreneurs, who are willing to have their own startups?

There are a lot of startups coming in fintech space. Fintech is a good platform/mediator which connects the entire digital payments ecosystem. Fintech start-ups are launching great products /features to ensure frictionless payments in a more trusted way along with loads of value-added benefits.

We are also running an internal project Horizon to fuel digital transformation along with external synergies with dynamic Fintech companies. The project relies on two levers – change and innovation to create solutions for the future. Through Horizon, we aim to focus on continuous innovation to leverage digital transformation and solve traditional problems with the help of newer forms of technology.

The rule for fintech and budding entrepreneurs is to find a good opportunity, work around a solution, and then synergize with a company like us.