As the digital payment landscape evolves, businesses can rely on payment aggregators to stay ahead of the curve, adapt to changing customer preferences, and create new growth opportunities.
Online payments have become an integral part of our lives and business operations. From transactions that include shopping, booking, or paying bills, the dependency on digital payments has significantly risen in India over the last decade. According to An India Economic Strategy To 2035 study, India’s GDP is expected to grow by $950 billion, thanks to the role of fintechs such as payment aggregators, digital lenders, and the like.
Currently, digital payments are the most preferred payment method among Indians. This shows the importance of payment aggregators in driving India towards the digital landscape of financial inclusion and accessibility. Also referred to as payment facilitators or merchant aggregators, the ability of payment aggregators to streamline online payments and enhance the efficiency of the entire payment process has made them indispensable for businesses of all sizes. The recent RBI regulation deems existing payment aggregators to have a net worth of at least ₹25 crore by the end of March 2023, establishing that only sustainable and genuine companies operate in the Indian market.
Streamlining online payments and enhancing efficiency
Payment aggregators (PA) have played a significant role in simplifying and streamlining the online payment experience for businesses and consumers. Since most payment aggregators are on-boarded as intermediaries, they support banking institutions with the consolidation of payment processing by eliminating the need to establish individual relationships with multiple processors.
A seamless integrative experience is built through a unified interface that accepts various payment options, and through a centralised platform or dashboard that consolidates transaction data from various sources. Such a centralised view allows businesses to monitor transactions, track payments and generate reports from a single interface. Needless to say, this process makes it easier for all businesses and merchants to start quickly and at a cost-effective price.
While a payment gateway provides the technology, a payment aggregator handles the funds.
Creating novel advantages for businesses
Payment aggregators offer several advantages to businesses looking to accept online payments in the form of:
● Easy integration: PAs provide businesses with seamless integration options, enabling them to integrate payment functionality into their websites or apps quickly. This ease of integration eliminates the need for extensive technical expertise, making it accessible to businesses without dedicated development teams. They can simply use a payment aggregator’s API or SDK to enable online payments on their platforms.
● Enhanced security: Security is prioritised by implementing robust payment protocols, encryption techniques, and fraud detection systems. By leveraging these security measures, businesses can minimise the risk of data breaches and fraud, safeguarding the company’s and its customers’ financial interests. Another added layer of security that PAs have integrated is tokenisation. This payment process substitutes sensitive card details with a cryptographically generated random string, referred to as the card token. Since its introduction by the RBI in 2021, tokenisation has been adopted widely by businesses.
● Varied payment options: PAs enable businesses to accept various payment methods, including credit cards, debit cards, digital wallets, and alternative payment methods. This flexibility allows businesses to cater to the diverse preferences of their customers, enhancing customer satisfaction and conversion rates.
● Cost savings: PAs can help businesses save by eliminating the need for extensive infrastructure, payment gateway setup fees, and ongoing maintenance expenses. This cost-effectiveness is particularly advantageous for small and medium-sized enterprises (SMEs) with limited financial resources.
Innovating to meet evolving needs
Payment aggregators continuously strive to meet evolving payment needs by offering innovative products and features. They understand the importance of staying ahead of the curve and addressing emerging trends in the digital payment landscape. Examples of these innovative products include mobile point-of-sale (mPOS) solutions, subscription billing services, tokenization, and one-click payments. mPOS solutions leverage devices like smartphones and tablets to accept payments on the go. There are fintechs like RuPay that are integrating CVV-less payments on tokenised cards, allowing for smoother and faster card payments since it does not require cardholders to pass CVV details if it is tokenised, it is more secure and creates a faster checkout experience.
For SaaS-related businesses or those offering membership-based services, a subscription billing system provided by PAs allows them to set up recurring payments for subscription-based models easily.
Driving innovation for tomorrow
As technology advances and consumer expectations evolve, PAs will continue to play a crucial role in shaping the future of online payments. They are at the forefront of adopting emerging technologies such as blockchain, biometrics, machine learning and artificial intelligence. These technologies have the potential to enhance security, streamline transactions, and provide personalised payment experiences.
An emerging association with Indian payment aggregators is the proposal for seamless cross-border payments. As businesses expand globally, cross-border transactions are becoming increasingly common. PAs are designed to simplify cross-border payments by reducing complexities related to currency conversions, compliance and regulatory requirements. This will facilitate better relations for international trading, thus unlocking newer business opportunities. The integration of India-Singapore UPI is evidence of the remarkable advancement in online payments thanks to the robust infrastructure of payment aggregators. On a global scale, there are players like Venmo and PayPal that are constantly innovating and tweaking their own tech infrastructure to ensure ML and AI tools are fed clean data to produce accurate results.
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Cashfree Payments
As new payment methods and technologies develop, such as cryptocurrencies and decentralised finance (DeFi), and India’s very own Central Bank Digital Currency (CBDC), PAs are expected to integrate these options into their platforms. For consumers, CBDC as a payment method is expected to be cheaper and quicker for international remittance as well as have lesser downtime and faster settlements. These methods will enable PAs to revolutionise how businesses accept online payments, offering streamlined processes, enhanced security, and a range of innovative solutions. As a result, PAs have become indispensable partners for businesses in the digital payment ecosystem through their ability to simplify integration, provide diverse payment options, enhance security measures, and save costs.
Looking ahead, payment aggregators will continue to drive innovation by embracing emerging technologies, facilitating seamless cross-border transactions, integrating new payment methods, and providing valuable data insights to businesses. As the digital payment landscape evolves, businesses can rely on payment aggregators to stay ahead of the curve, adapt to changing customer preferences, and create new growth opportunities.
