Bank Cards and E-

payments

March 15, 2011

Agenda

Background

e-Payment Initiatives

Benefits and Key Focus Areas

In Conclusion
Agenda

Background

e-Payment Initiatives

Benefits and Key Focus Areas

In Conclusion
 E-Payments

Covers large canvas

E-Payments Can change the way we shop, pay

bills, travel, conduct business,
bank and live
 Development Drives Growth
Television Electricity
(1926) (1873)
100
Microwave Radio
(1953) (1905) Telephone
(1876)
80 VCR
Percentage of Ownership

(1952)
Automobile
(1886)

60

PC
40 (1975)
Internet
Cell Phone (1975)
(1983)
20

0 20 40 60 80 100 120
Source-- Microsoft Years Since Introduction
Explosive growth of e-
commerce

The explosive growth of e-payment is driven

on the sound platform offered by e-payment
technologies …!
 eCommerce – Few examples
Live happenings across
World !!

 Fund Transfers
Fund Transfers
 Bill Payments
Mobile Top-up  Ticketing & Reservation
 Prepaid card Top-ups
And more ...  Broking
 Auctions
Bill Payments
 Gaming
Ticketing

Shopping
mCommerce
 Transaction brokers/
Payment Enablers
Mobile Airline
 Act as “mBusiness
Ticketing store front” ( e.g.:
mShopping)
Third party
Mobile Shopping Banks/
Mobile Service
Credit
Providers/
card
Mobile Compani
Operators/ es
Mobile Stock
Service
Trading
Aggregators
 Role of Infomediaries
 Proof Of Purchase
Mobile Movie
ticketing
From payments to e-payments

Source: Using the mobile device to identify and pay for

services; Jason Andersson; Ericsson AB;2002 April
India :
Increased Usage of e-Channels @ ICICI Bank
Share of Share of
transactions transactions
Channel
in March in September
2000 2005
Branches 94% 30%

ATMs 3% 40%

Internet 2% 15%
Call centre &
mobile
1% 15%
However..

India remains an overwhelming cash based

economy

More than 90% PCE made with cash

Agenda

Background

e-Payment Initiatives

Benefits and Key Focus Areas

In Conclusion
Cards
Drivers of migrating payments
through cards

Spend on cards in India is only about 1% of

PCE

Number of cards has increased from 7 Mn in

2000 to 44 Mn in 2004 (CAGR 55%)

Usage up from 2 Bn USD in 2000 to 22 Bn

USD in 2004
 Drivers of migrating payments
through cards

Innovative Product Proposition

Drivers backed by Operations & Service
Excellence
 Innovative Product Proposition
Co-branded proposition to drive
Co-Branded Loyalty and
Cards Incentive to use

ICICIBank HPCL Credit Card

The largest VISA co-brand in
Asia
Example Constitutes a growing
proportion of total card issues -
42% in ’04 to 45% in ’05
Fuel spends 2.5 times more
than spends on regular cards
 Innovative Product Proposition
 Travel Card
Wider acceptability and greater
security
Travel Card Multiple currencies and
denominations
Spends on Travel Cards increasing
steadily
Spends on Travel Card is Increasing

100%

80%
Organised M arket Estimate f or Outbound
Remittance f rom India ($ Bn) 60% Travel Cards
40% Travellers Cheques
FY'04 FY'05 FY'06
Travellers Cheques 1 1.15 1.25 20%
Travel Cards 0.02 0.1 0.25
Total 1.02 1.25 1.5 0%
FY'04 FY'05 FY '06

Source Amex and VISA Estimates

Debit Card Volume and Spends – Asia
Pacific
 Debit Cards

Canrevolutionalize electronic
payments in India

Can be a major catalyst in

changing consumer behaviour
Debit Cards
70% of cards in India today are
Debit Cards

Usage is widening
 Debit Cards Performance
@ICICI Bank
Cards in Force (number in Mn)

8
7
6
5

Increasing
4
3

penetration of
2
1
0
Debit Cards Mar-03 Mar-04 Mar-05 Sep-05

Total Spends on Debit Cards

Increasing increased more than 4.5 times
spends on over last two years
Debit Cards Spends per Debit Card increased
43% over last two years
 Emerging Trends in Debit Cards
Business
Segmentation and service
Mechant rewards and loyalty
programs
Relationship management

Emerging New innovations in technology

Trends e.g. wireless POS

New payment forms e.g.

contactless, through mobile
phones
Remittances/ Money Transfer
Card to Card Money Transfer

 Cards can provide cost

effective channel for
remittance

 Valuecan be loaded
from bank account of
sender to card of
receiver

 Improvesefficiency
and accessibility
 Card based remittance

REMITTER BENEFICIARY PRODUCT

Internet
Credit /Debit
Card Prepaid /
ATM Card to Card
Debit/ Credit
Transfer
Card
Cash
Card
settlemen
t system
Visa Money Transfer -
Performance
SME Business
 SME Business

Use of electronic channels will

Increase efficiency
SME
Business Track expenditure
Improve productivity
 Innovative Product Proposition

Cashless transaction and credit

Fleet
facilities for closed user group
Card environment

Credit resides on card

Ability to break up limits into
constituent parts
Convenience – cash-less transactions,
Benefits
multi-application, single cheque
repayment
Loyalty – attractive rewards points
Complete MIS to users
Innovative Product Proposition

Pre-paid and credit versions

Partnership with leading oil
companies
ICICI Working capital requirements of
Bank transporters (goods available at oil
Fleet company outlets)
To be extended for multi-
Cards
applications i.e. toll, spare parts
etc.
656812 DriveTrack fleet cards
already issued and in use
Rural / Agri Business
 Rural and Agricultural Economy

Technology and electronic payment

Rural systems can be the key drivers to
and Agri help us reach out to the rural / agri
Business population through cost effective
modes of delivery
 Innovative Product Proposition

Farmer Low cost payment mode for use in

Card Rural / Agri economy

Easy access to credit – enhanced reach

through low-cost ATMs & merchant
outlets
Faster updation & access to
Benefits repayments – electronic transactions
Reduced financing cost – amount
utilized when needed
Removal of cheque & consequent
delays
Innovative Product Proposition
Loans to farmers for agricultural use
(including inputs )
Limit resides on card
Usage
Cash withdrawal from ICICI bank
ICICI ATMs
Bank POS usage through ICICI Bank POS
Kisan only
Card Other services through local bank
branches
Eg. Loans to tobacco farmers,
sugarcane farmers etc
Top rural ATM currently handles
approx. 350 transactions/day
Government Sector
 Government Sector – A big
potential

Procurement/ Purchase
Tax Collection (Filing of returns on
Government the net)
Sector Distribution of pension on cards
Government bills (e-governance)
 Government Sector – A big
potential

Willmake government
transactions more transparent
Government
Sector Willreduce administrative
paperwork
Internet
 Evolution of Internet Banking

Access to Basic Transfer from Transfer to

Account one account to other customer
Information another for accounts with
same customer the Bank
within the Bank

Other Value
Added Transfer to other
transactions like accounts across
Bill Pay, Online the Bank
Bancassurance
 ICICIBank.com

OnlineDemand Draft
Money Order Online
Seamless Billpay
Various
Services Pure Gold Online
Offered Bureau De Change
Mutual Funds Online
Outward Remittance
Bancassurance Integration
 ICICIBank.com

Monthly Users: 6 lakhs

Users and Monthly fund transfers : 5 lakhs

transaction
s
Monthly Bill payments : 2.33
lakhs

Railway Online ticketing – 0.3 Mn tickets

online to 3 Mn tickets in 2006
Mobile
 Evolution of Mobile Banking
From Push
Services
ICICI Bank Offerings
 Account Debit/Credit - When bank
A/c is debited by Rs.5000/- or
more,as specified by customer
 Cheque Bounce intimation
 Balance above/ below Limit
specified by customer
 Credit card payment due date
reminder
 Approaching credit limit
intimation
 Demat account credited/debited
 Instruction rejection intimation
To Pull services
ICICI Bank Offerings
 Account Balance Inquiry
 Last 3 transactions
 Cheque Status Inquiry
 Stop Cheque Request.
 Cheque Book Request
 Bill payments
 Payment due date
 Reward points for redemption
 Demat balance enquiry
 Transaction status
 Bill Details
Mobile Top-up

Allows card holders

to top up mobile
airtime using Credit /
Debit card

Potential
applications:
Airline and
Railway tickets
Bill payments
mChq
 Thefirst mobile-to-mobile
payment option between
customers & retailers

A mobile will now serve as

a Secure Point of Sale
(POS) terminal and
payment mechanism

 Simpleand fully secure

transaction since every
transaction is pre-
approved by the
cardholder and digitally
signed for, through a PIN
number
Visa Wave
 Visa Chip Card

 Just
1 account for contact
chip, contact less and
magnetic stripe
technology

 Launched in Malaysia,
Korea, Taiwan

 Foruse in supermarkets,
convenient stores, mega
malls, quick-service
restaurants
Agenda

Background

e-Payment Initiatives

Benefits and Key Focus Areas

In Conclusion
Benefits

Convenience
Lower transaction costs
Benefits Increased operational efficiency
Can help reduce the size of
informal economy
 Key Focus Areas

Need to focus on security and

transaction authentication for
various channels
Payer authentication – “Verified by
Security and VISA” and “ MasterCard
transaction SecureCode” programs to increase
authenticati payment security
on CV2/CVC2 (CVD) Verification to
confirm genuineness of cards and
legitimacy of account numbers
Dual authentication for Internet
Banking
 Key Focus Areas

Customer education on benefits

and security requirements like
Customer password protection etc of each e-
education payment channel
and channel
penetration Increased penetration of the
channels and devices like mobile
phone, Internet, POS etc for
increased acceptability and usage
Agenda

Background

e-Payment Initiatives

Benefits and Key Focus Areas

In Conclusion
 In Conclusion
Various new channels for e-
payments today to complement
traditional channels

Penetration of e-channels has

increased substantially
In
Conclusion
New technology initiatives and
platforms provides the ability to
drive newer payment channels

Customer today is more responsive

to adopt newer channels
 In Conclusion

Totalnumber of transactions
through e-payments will increase
expontentially

In Need to continue focus on

Conclusion  Security of various e-channels
 Customer Education
 Penetration of enabling
infrastructure to realise true
potential of e-payment
Thank You