Soft PoS will empower merchants in a big way: Worldline (India) CEO

"Demonetisation provided the biggest boost to PoS machines", said Ramesh Narasimhan

Worldline India, a wholly-owned subsidiary of the Paris-based Worldline, is a leading player in the payment space and caters to 1.5 million merchants in the country. In 2020, Worldline’s acquisition of Ingenico for $8.6 billion made it the largest payment player in Europe and fourth in the world. Ramesh Narasimhan, chief executive officer of Worldline (India), spoke with Raghu Mohan on emerging trends in the local acceptance business. Edited excerpts:

The number of outlets with point-of-sale (PoS) machine acceptance is still poor, at just above 6 million units, despite digital being the in-thing.

A certain infrastructure is needed to maintain a PoS machine over its life — access to paper, consumables, and repairs across the country. This comes at a cost, whereas a QR Code or UPI comes at little or no cost. Now, it’s mostly the banks that deploy PoS machines. During Covid, many restaurants and shops shut down, and merchants wanted their PoS machines to be taken back since there was no use for them, and a lot of them were uninstalled. But on the other side, PoS machine deployments are still growing at 28 per cent annually, because it offers so many value-added services.

You can do an EMI when you use it. (You can’t do an EMI when you pay via UPI, or a QR code in a store.) You can do dynamic currency conversion, especially those with foreign cards; and offer loyalty points. And you can also link to an ERP solution that manages the merchants, inventory, and stuff like that. If you see the advancement of PoS machines, from the earlier Linux machines to Android, it takes the potential functionality to the next level.

But what explains the slow pace of PoS machine deployment, pre-pandemic?

Demonetisation provided the biggest boost to PoS machines. That said, if you compare us to Western or even the smaller Southeast Asian countries, we are behind on PoS terminals, simply because there’s an expense to it; and merchants are not willing to fund it. And most of the PoS machines are imported. But the regulators have put a lot of work into it, and provided support through the Payments Infrastructure Development Fund for putting up PoS machines.

Where does ‘soft PoS’ come into the picture?
 

This is the next level of technology where you don’t need a PoS machine at all. You just download the PoS software on your phone, and you’ll get going. And many of the value-added services I mentioned earlier will be available on the merchant’s phone. While PoS lags when compared to UPI and QR Code, it brings its own functionality to the table. Soft PoS can easily be a viable option and offer the same functionality at a much-reduced cost. So, we will have PoS hardware machines, soft PoS, UPI and a lot of payment methods coexisting.

At what stage do you think merchants will start weighing the trade-off involved — of incurring the cost of the merchant discount rate (MDR) and being able to leverage the data on PoS; or simply accepting payments via UPI and QR Code at no cost, but with nothing by way of data to play with?

The trade-off will happen when merchants start seeing the positive effects of value-added services. If you go to a five-star hotel, or a three-star hotel in a touristy place, there are PoS machines connected to their inventory management system. When merchants understand that data is the new oil, they will continue to look at the cost (like the MDR) element early on, but once the benefits start to flow through, they will be willing to invest in PoS machines.

Take Zomato and Swiggy. They don’t just pick up and deliver food, but also provide the menu and a rating. These add value, otherwise merchants would not have adopted services like that. So, the moment they realise that there are benefits, I think they will start swinging the other way around. And many of our soft PoS customers are graduating to a hardware PoS as well. It’s also incumbent upon service providers like us to add more value-added applications to the merchants. Recently, we have deployed our Android terminals in partnership with Bank of India to digitise several kinds of citizen-centric services — fines and tax collections for the Panvel City Municipal Corporation and the Madhya Pradesh police department.

There’s been a lot of consolidation in your segment in the last three years. You took over Ingenico; Fiserv Inc. acquired First Data Corp; and Fidelity National Information Services bought Worldpay.

Consolidation is inevitable in every industry. When Worldline acquired Ingenico in 2020, it catapulted us into the largest payment player in Europe and the fourth largest in the world. Ingenico in India was an online payment gateway while Worldline was in the store business (PoS machines). So, it became a complementary acquisition for Worldline, because both businesses were catering to different segments of the market in the payment space; and we were able to integrate very easily.

And there are so many synergies that we are continuing to work on. On the online payment gateway — that is, on the Ingenico side — we have a significant number of educational institutes where we enable payment of fees. And we are also able to offer the PoS machine solution — students, or their parents who want to pay using a card, can use it. There’s a PoS machine for your canteen, and for specific use-cases inside the campuses. So, we’re able to offer end-to-end solutions as a single company.