SBI, Hitachi bring scale to digital payments in Indian joint venture
The State Bank of India and Hitachi Payment Services plan to bring their heft to a joint merchant acquiring venture to expand digital payments in India.
The companies are forming SBI Payment Services in Mumbai to support a digital payment platform capable of bringing new technology to merchants of all sizes and protect it with artificial intelligence and other Hitachi capabilities.
"Through this joint venture, we aim to maintain our position as the top acquirer in the merchant digital payments space by providing technologically superior and seamless services to our customers," Shri Rajnish, chairman of State Bank of India, said in a Wednesday press release. "We will also utilize business analytics to develop strategies to penetrate into hitherto untouched Indian towns and cities through merchant centric digital payments solutions."
As the largest-state owned commercial bank in India, SBI says it has more than 425 million customers and six million POS terminals, while already migrating more than 80 percent of its transactions to alternate delivery channels. Hitachi Payment Services has offered various cash and digital payment solution technologies in India through its 45,000 ATMs, 13,000 cash recycling machines, and 900,000 POS processing devices, including mobile POS.
The venture may help India address its cash crunch and desire to increase its population's digital payment capabilities. In recalling its larger bills in late 2016 as a way to crack down on tax evasion, the country has faced a vast difference between payment methods in its bigger cities vs. the cash-paying habits of the country's residents living in massive poorer, rural areas.
The move to limit cash also brought into light the fact that many digital payments players were ready to swoop in to claim the country as a new market.
Samsung Pay and American Express were quick to move into the payments market in India early last year, as the mobile payments platform also sought to expand in the country through relationships with Visa and Mastercard.
India's traditional mobile money apps Paytm and Ola reported strong upticks in users in the wake of the cash crunch.
SBI and Hitachi are not new to the digital payment landscape, giving solid footing to their new merchant acquiring business.
"Hitachi's joint venture with SBI 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," Toshiaki Higashihara, president and CEO of Hitachi, Ltd., Japan, said in the release. "This coincides with Hitachi's vision to improve people's lives by providing digital solutions in India and other countries."
Prior to the new business venture, Hitachi Payment Services had been providing deployment, technology and management services for the card and digital acceptance payment network of SBI since 2011.
Hitachi Payment Services is a wholly owned unit of Hitachi Ltd.