Hitachi Payments will invest in SBI Payment Services, a wholly-owned subsidiary of SBI, and through taking 26% in equity, turn SBI Payment into a joint venture. Both parties will proceed to apply for regulatory approvals.
SBI, as the largest state-owned commercial bank in India, has more than 420 million customers and more than 6 million point of sale (POS) terminals. It is the largest merchant acquirer in the market in terms of terminals through its subsidiary SBI Payment.
Hitachi Payments has been providing deployment, technology and management services for SBI's card and digital acceptance payment network since 2011. The company empowers financial institutions with technology-led cash and digital payment solutions such as ATM managed services - from ATM purchasing to asset management and maintenance - and POS processing services, which transfers transaction data to card-issuing companies. It has over 55,000 ATMs and 850,000 POS devices (including mobile POS) under management in India.
Through this joint venture, Hitachi has entered the merchant acquiring business in India. Acquirers link merchants, card issuers and payment networks, so that merchants can accept card-based payments. Hitachi will contribute to the development and expansion of digital payments service business in India by creating a digital payments platform that will enable better convenience and quality through leveraging on SBI's customer base, branch network, brand trust and Hitachi's capability and knowhow around digital payments and technologies such as big data analytics and artificial intelligence (AI).
Rajnish Kumar, Chairman of State Bank of India said, "At 2,500 POS per million people, the penetration of payment acceptance infrastructure is still low. With this JV, we aim to grow the payment landscape by providing a frictionless modern digital payment platform to our customers. In Hitachi Payments, we see a long-term business and technology partner that has the ability, capability and willingness to develop the broad vision of SBI which is tied into the success of the digital payment imperatives of the country. SBI also believes that the future of the payment services lies in the capability of the JV to develop new digital acquiring strategies for the benefit of its consumers."
Toshiaki Higashihara, President & CEO of Hitachi, commented, "Along with the accelerating movement of digitisation around the world, Hitachi aims to improve people's lives by providing digital solutions in India and other countries. By establishing the joint venture with SBI, Hitachi will further contribute to the development of digital payments in India by building a state-of-the-art digital payments platform and leveraging SBI's robust customer network."
Bharat Kaushal, MD, Hitachi India noted, "Under the India Government's Digital India initiative, India is progressing towards becoming a knowledge economy with technology as the pivot. Hitachi is aiding in development of India's social infrastructure as well as giving a fillip to the economy. This mutually beneficial partnership with the financial giant SBI will allow us to widen our footprint pan-India."
Loney Antony, MD, Hitachi Payment Services said, "Since 2011, we have been associated with SBI, managing over 70% of its current network and this JV has further strengthened our partnership. As a result of our superior in-house technology platform and widespread field services in the country, SBI has been able to not only roll out the largest acquiring network, but also offer several innovations to its consumers - the recently launched MOPAD, a multi-modal payment device for POS is one such mention. This will continue in the future as Hitachi Payments and SBI jointly build a world-class payments platform for India which can be rolled out for international customers as well."
Hitachi will provide services contributing to Digital India by creating solutions with Lumada, Hitachi's platform for turning data into insights to drive digital innovation. With this JV, Hitachi will accelerate digitalisation of financial services in India by linking up the digital payments platform to technologies in Lumada. Additionally there are plans to provide solutions for mass transit and e-commerce.
Hitachi has also been contributing to digitalise governmental and educational services such as e-governance and e-education mainly through Hitachi MGRM Net. Established in April 2018, Hitachi MGRM Net works on the expansion of social innovation businesses in India.
The financial services market in India has been maturing due to India's Financial Inclusion policy and Digital India initiatives. The Financial Inclusion policy aims to bring financial services such as banking and ATMs nationwide, including to rural areas. Bank account holders have increased substantially in the past few years and as a result, banking transactions on ATMs and digital transactions have increased as well.
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