Prizm Payment Services exemplifies the tremendous pace and volume of growth in India's ATM industry. Formed four years ago with an investment from California-based Sequoia Capital, and management from a team of EFT veterans, the company today is poised to process $50 billion in transactions in 2012, a 43 percent increase year over year. Deloitte has named Prizm one of India's 50 fastest-growing companies.
Recently ATM Marketplace had the opportunity to get Prizm's perspective on India's booming ATM market in an email exchange with Jayant D'Mello, director of the ATM business unit for Prizm Payments.
ATM: Let's start with some background on your company's presence in India. How broad is Prizm's reach in the country right now?
JD: Prizm Payments is in three main lines of business — ATM Deployment and POS Deployment, and ... a new line of business called Emerging Payments. Currently we are present nationwide with a deployment of 10,000-plus ATMs and 30,000-plus POS [devices]. Our ATMs are present in 650 cities across the country, with 850 employees, 93 service depots and 14 offices.
ATM: Who are your major competitors?
JD: Prizm Payments has no substantial competitor that offers all three service offerings — ATM, POS and Emerging Payments.
In the ATM space, it competes with NCR, Diebold, AGS Infotech (a Wincor distributor), FIS (Fidelity), TCBIL (a local company of the Tata Group), Euronet and FSS (a local Indian company). In the POS space, we compete with ATOS Worldline.
ATM: Are you seeing new entrants to the market, given the growth forecast?
JD: Traditionally, there were eight service providers in this space and this will see one to two more competitors. However, these service providers need to make huge investments to make their business successful and viable.
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ATM: What does the Reserve Bank of India's decision to permit white-label ATMs mean for Prizm?
JD: Prizm has several customers across the value chain of ATM deployment. We offer maintenance services, managed services and independent deployment on behalf of the bank. This is primarily a B2B play. The white label ATM decision allows for Prizm to deploy ATMs under its own brand and offer a B2B brand in the market. It also leverages the assets of the company and its capabilities. It also increases our ability to buy from vendors due to economies of scale.
ATM: What kind of potential does the Indian market really have?
JD: On the ATM and POS side, India is very under-penetrated. Card base is growing at 26 percent and the country has 300 million debit cards, each of them performing at least three transactions a month.
The country is also very cash dominated, with $400 billion being dispensed through ATMs. There are only 100,000 ATMs in the country. Under current card levels, this is 50,000 to 75,000 lower than where we should be.
ATM: What particular challenges does the market present?
JD: ATMs are being deployed by private and public sector banks and there is no slowdown of ATM deployment in the country. The challenge that this market presents is the growth in the ATM ecosystem — for example, cash in transit companies, currency chests, telecommunication facilities, etc., to make ATM deployment ubiquitous.
ATM: What are the major differences in operations between India and other markets such as the U.S.?
JD: Unlike the U.S. in which the value chain is completely disintermediated — with deployers, processors, issuers, acquirers and service providers — the value chain for ATMs in India has fewer players. Banks typically own the ATM brand and outsource the deployment and services to players like Prizm.
Banks have deployed ATM switches and deployers will deploy ATMs in the country and connect them to the bank deployed switches. In some cases banks may require companies like Prizm to also provide switching services. Cash is provided by banks only (even in the proposed white label ATMs) and Prizm will arrange for cash to be replenished on the ATM. There are no cases of merchant fill.
Banks are connected to local shared ATM networks and interchange is fixed in the country. All on-us transactions are free and the first five off-us transactions are also free — effectively making customer ATM transactions free (since the average in the country is three). There is no surcharging in the country.
ATM: The use of mobile banking is growing fast in developing markets such as India. What role is Prizm looking to play in mobile payments and banking?
JD: We have launched a mobile-based POS service which has a card swiper installed on a feature phone (it's available also on Android).
ATM: ATM operators have said that fee structures in India make it difficult for them to make money. Does Prizm have the same problem?
JD: No. Most contracts in the country are fixed fee models (outsourcing arrangements) or win-win revenue share arrangements.
ATM: What is the key to success in India?
JD: Key success factors are:
- Keen understanding of India
- Analytics-based ATM site selection
- Multi-vendor ATM maintenance capability
- In-country ATM switching services
- Nationwide presence/network of engineers and service providers
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