The problem of high transaction failure rates has been solved to a large extent, Praveena Rai, chief operating officer, National Payments Corporation of India (NPCI), told Shritama Bose and Shobhana Subramanian. RuPay cards now account for a third of the card payments market, Rai added. Edited excerpts:
In 2020 while digital payments surged, there was also the problem of high failure rates and outages. What have been the takeaways for the industry?
It’s a good place to be. It’s a fantastic problem to solve. The demand side really picked up so well in a situation where the country needed it so much. I’m on one hand really glad and happy that we have the core infra running the systems where the users were aware and a much higher level of awareness build-up, which was highly need-driven at a time when people were locked in and wanted to have their transactions in a safe way without exposing themselves and without having too much contact.
Really the discovery of digital payments for a lot of people happened. So that demand really created the supply-side challenges that you’re referring to. The learning is really that in India we have to be prepared for the exponential growth to continue and the inflexion points will surprise us.
The second thing is response and being able to get things back in shape quickly. We are seeing that in the ecosystem today. Institutions have done what they needed to do from an infrastructure standpoint. We’ve been very heavily involved in a lot of that activity, having technology that is not just scaling up in a linear fashion, but very efficient and effective manner.
All those things are starting to fall in place and we are already seeing the trend of good success rates come back. Some of the very large institutions in the last few days have shown success rates which are better than anything seen in the past.
UPI P2M volumes have really shot up. Do you think all the merchants who could have been acquired have already come under the fold?
No, I think we are still scratching the surface there. On one hand, we’ve seen the UPI volumes grow and on the other hand, the percentage of P2M transactions has also significantly increased. Earlier, we would have seen 35% of transactions on P2M and now that number is hovering closer to 43-45% in the last couple of months. So, a number of users who started out making small payments to each other whenever they needed are starting to use it for merchant payments.
E-commerce is a very significant driver, but we are also seeing a lot of other interesting categories emerge. For example, we now have some of the bus transport corporations going live on UPI. Canara Bank has done this in Bengaluru. So, there are a number of use cases still being discovered. So, there is still a long way to go before we can say we have addressed all the possible use cases.
With some shareholders of NPCI now setting up NUEs are you looking for new stakeholders?
NPCI is dedicated to India’s digital payments vision and whatever has happened in the last decade would not have happened if the ecosystem partners were not equally committed. There are two parts to this. One is the role that organisations may play wearing their investment hat. They may make various investments in the market. The other is the role they play in NPCI as key stakeholders. Whatever NPCI has brought to the market has been co-created with other stakeholders. That DNA will stay. We will remain committed to market participants. The role that organisations may play as investors will play out and we will take it up at that point in time. Our action plan is already in place. At this stage, we are in a wait, watch and observe mode.
Zero MDR is still a sticky point with the industry. How has it changed life for NPCI?
Having a revenue stream is important and ecosystem players need to have returns for whatever investments they have made. However, the market is looking at it from a relationship value standpoint. As long as the demand stacks up, that approach will drive support for the systems that are there. Our market share on RuPay has stayed flat. We are at about 34% by volumes and 30% by value. We are making an incremental push on the credit card side of the market. So, we have the full portfolio.
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