Sun, 07 February 2021
Just today, I had forgotten my wallet at home and had to pay for groceries. I however did have my phone. So, I asked for the option to pay for with any of the popular local wallet apps: b-wallet, Viva Cash or Benefit Pay. The store promptly offered me the option to use one of the above and when there was an issue, the cashier offered to allow me to transfer to her number and she would settle with the store. If I look back to our lives before contactless, app-based systems, this interaction would have been one out of a sci-fi novel.
These systems are the part of the fintech ecosystem that touches our lives daily and in multiple forms. The wi-fi enabled credit and debit cards, the telecom operators that now allow us to add money to our mobile accounts have begun to establish payment gateways and systems for everyday interactions.
Technology has been a gift through the pandemic, but nothing has permeated our lives as much as electronic payment systems. That is the broad area that all these payment systems fall under. An electronic payment system is inherently contactless, usually mobile, and always accountable. It has gained traction over 2020 and new entrants and innovative systems are emerging rapidly.
Companies are doing this to either consolidate their supply chains by integrating into product lines that are linked to their core offerings; or, to access customers in ways they could not earlier. This allows them to reduce the costs at each stage of customer interaction.
Core telecom operators like Batelco and Viva front end as a payment gateway with backend tie-ups. So, while they act like payment gateways, they are simply linked through bank accounts, to the various vendors. When you add to the wallet account, the money is stored in the operators’ own account and is available for use by them – unless you spend it. Even if you spend 80% of what is in your telecom wallet, they still get an additional 20% per user. That multiplies into a lot of money that is then available for their cash management and usage.
New businesses are also emerging as part of this ecosystem. Standalone, independent electronic payment gateways are also gaining headwinds in Bahrain. BenefitPay is a popular payment gateway that operates in the B2C area as well while gateways like NEC payments or even Gatee that focus on the B2B segment. Of the many advantages of these independent systems, the one that benefits the end user the most is probably that they can interact with a variety of banks and vendors. It also eases the load on the core banking operations and gives banks additional ways to access customers.
These businesses however are capital intensive, and the fixed costs are very high. Data storage, encryption and security are the bedrocks of these businesses just as factory and equipment are to manufacturing facilities.
Tie-ups and marketing form the other end of the whole eco-system. Even in the world of technology and contactless interaction, it’s ultimately relationships, agreements and personal interactions that create that eco-system and allow it to operate the way it does. Why a particular store prefers one app to another, why they accept some cards and not others and how much all this adds to the final consumers experience and convenience – that is the core focus of any electronics payments gateway. Rather, it is the core of any business irrespective of its dependence on technology.
Pria is a business consultant and advisor. You can follow Pria at her Instagram handle businessclues33 or read more of her articles at www.business-clues.com