India Digital Payment - Competitive Forces To Lead To Contraction In Merchant Discount Rate: Systematix
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Systematix Research Report
We hosted MSwipe - one of the largest payment aggregator companies in India - to understand the business dynamics of point of sale terminals, merchant discount rate charges and the positioning of banks and key fintechs in the evolving digital payment ecosystem.
Key takeaways are:
On the technology and business collaboration front, fintechs/banks (including small finance banks) are still in the evolution phase. While there is a possibility of banks absorbing several fintechs, some fintechs could apply for a banking license as well - Bharat Pe is a classic example.
The actual cost of a POS device is not recovered in the first three years. It is a cash guzzling business and hence banks prefer to outsource this business operation. Payment aggregators are moving to the lending business and banks have shifted away from POS terminal business operations.
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