Credit Card and Debit Cards are likely to be rapidly overtaken by digital payments. The infrastructure around credit/debit card payments is very expensive for both merchants and banks. However, payment banks, mobile wallets and even traditional banks armed with new payment technologies like the Unified Payment Interface (UPI) can replace the existing merchant payment mechanism with customers’ and merchants’ mobile phones working as cards and POS machines respectively.
National Payments Corporation of India (NPCI) is now working on an advanced version of the UPI where iris recognition could be a second factor of authentication (mobile being the first) to make a payment. These new payment systems could have a significant adverse impact on merchant fees and on the related “float” enjoyed by traditional banks.
Lending Based on Big Data
Compared to the current practise of uniform pricing in consumer loans and usage of traditional credit scores, the big data analytics
based on payments and other digital footprints (online buying, etc.) would enable differentiated risk-based pricing and credit decisions based on payments and digital footprint. Low distribution and acquisition costs can make even micro loans profitable for banks.
