1. How should we Pay tomorrow? H.Srikrishnan Executive Director

2. How we Pay today?  Population: 1 Billion +  Pay by  Cash  Cheque  Card  Electronic  Credit Notes  Kind and TODAY is CHANGING

3. Composition of Today’s Payments  CORPORATE – 30%  GOVERNMENT – 70%  RETAIL/INDIVIDUAL- Insignificant

4. Wholesale Payments - Today  CHEQUES  1047 clearing houses + 42 MICR centres  27.5 Lac cheques daily avg volume  150,000 cr daily avg value VS  RTGS  650 + centers & 10,000 + branches  60,000 cr daily avg volume Data Source RBI

5. Retail Payments-Today  Cards  50 Million + cards  16,000+ ATM’s  150,000+ POS  20,000Cr + Non Cash Payments VS  E-Commerce  B2C 540 crs in 2004-5  Cards, Direct Debit, Cash on Delivery Data source Venture Infotek & Internet and Online Assn. of India

6. Need For Expertise  Micro vs Macro  Government Payments  Private /Public Partnerships »Convergence  Barter vs Real  Air-miles to Cash  Real time vs Near Time  Instant  Delayed  Batch  Physical vs Remote

7. New Business Models drive Payments  Business Models  eProcurement  eInvoicing  eFinancial Supply Chain  On-line exchange  Automation, integration & Web-enablement as Levers  Banks: Shift from Transaction focus to Value driven Solution focus Electronic Banking over Proprietary Network Bank-To-Bank Financial EDI EBPP/EIPP Accepting & Processing Web Payments Internet based Transaction processing / Reporting Reporting

8. Centralization/Outsourcing Time Complexity of Management Decentralized Operations Centralized Financial Mgmt Shared Services Outsourced Cash Management

9. Adoption Trends Web-enabled, Universal payment channel Multi-bank access through single, standard open channel Direct EDI enabled channel/Proprietary Networks North America West Europe, Japan, HK, SGP, Aus APAC, East/central Europe, Africa Low Integration/Automation Capability High Integration/Automation Capability

10. India @ 2005: A Sanity Check Automation Web-enablement Integration Predominantly paper-based process Gradual emergence of ECS, EFT, RTGS Minimal inter-org information sharing (Low proliferation of end-to-end solutions like eFinancial Supply Chain) Poor Internet penetration among Mid sized corporates Offerings predominantly designed on proprietary network

11. Service Ambition for Payments  Pay  Who-ever  When-ever  in any currency  Provide  Instant Value  With no settlement delays  Privacy and Security guarantee.  Identity establishment  Authentication

12. How will we pay tomorrow  One wallet  Payment  Remote –Via Internet and Mobile  Proximity –Via RFID, Blue Tooth  Devices  PC equivalent  PDA/Mobile  Smart Chip -embedded devices

13. Key Considerations  Open systems  Banks  Telcos, ISP’s, Businesses  Cost of payment  Paper vs Card vs E&M commerce  Division/Region, Enterprise-wide and Country wide  Security  Identification and Authentication  Multi-Factor  Biometrics- Speech and Touch  Eco-Money  Usability  Environmental Friendly

14. Preparing for tomorrow  Organization  National Payments Council  Payments Vision  Participation  Beyond Banks  Open systems  Platform  Communication  Security  Legal and Regulatory framework

15. P2P, P2B,G2P,B2P Cards E-commerce M-commerce B2B,B2C,B2G,B2E E-commerce M-commerce Supply Chain E-commerce Supply Chain Online Exchanges Two Factor Multi Factor Multi Factor and Biometrics Individuals & Small Business Mid size Business Government & Large Business RTGS Online Single Sign-On Multi Security