India’s largest bank is launching payment gateway services, in a move which is likely to eat into the business of incumbent players in the space.
With the rise in e-commerce transactions and the resurgence of the online payment space, the government owned State Bank of India (SBI) has launched its own payment aggregator service.
SBIePay, the newly launched service will focus on facilitating payments for government services as well as m-commerce and e-commerce merchants.
The bank is also in the process rolling out Electronic Bill Presentment, Payment platform (EBPP) and IVRS service for making payment over phones.
The service will tap into payments related to central, state departments and municipal corporations. The payment platform already gives merchants access to 15000 bank branch, belonging to 5 of its group banks. It is in talks to add more than 40 Banks to process Internet banking payments.
Along with the payment service, the platform will also provide business information and analytics to the merchants and banks for all transactions as an add on feature.
Trouble for Incumbents
The banks entry as a payment aggregator is likely to take away a portion of the business from incumbents like CCAvenue. Payment gateways like IndiaIdeas, Times of Money Ltd., E-Billing Solutions (EBS), Atom Technologies, PayU, Citrus and Emvantage are also likely to lose out on some business.
Exiting private players have been undercutting each others transaction rates to survive in the market. Having the largest banking network in the country should play in tipping the choice as a preferred solution towards SBIePay.
SBI main focus is government services and with many of the existing services offering blotchy payment services, where most transactions are a hit or miss case, SBI will have to ensure that its service is more reliable than exiting ones.
Growth in Electronic Payments
According to the bank which has more than 256.4 million customer accounts, between 2008 and 2012, electronic payments in India have grown at a rate of around 32%, from about Rs 15,400 crores to Rs 47,349 crores.
Currently Debit Card and Internet Banking account for around 45 % of the transactions, 43 % of transactions are still processed through Credit Cards. Cash on Delivery (COD) comprises around 40-60 % of transactions within e-Tailing.
Government payments are still in a nascent stage and is currently operated through authorized bank branches, collection centers, drafts, etc, which will move onto the e-Commerce platform.
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