Central Banks and the Government have been advocating the use of digital payments due the coronavirus crisis. Do you see rise in adoption of digital payments as a result of this?
Yes – definitely. Digital transactions have now overtaken ATM cash withdrawals. UPI transactions overall have grown from < 1B txns in April to 1.5B txns in July. 1/3rd of these transactions are merchant transactions (almost US$ 5Bn / month). Even for BharatPe, the business is up 40% pre – Covid and 3x from April lows. We see a rise in adoption both from merchants and customers as it is the most contactless mode of payment offline and therefore the safest. In fact, we’ve seen a lot of card users shift to UPI.
Cyber fraud has been a matter of concern for many to migrate to digital platforms. A lot of measures have been taken by regulators, banks and service providers to ensure safe transactions, however such notorious actives still exists. What is your suggestion to the ecosystem on protecting data and regaining trust of the users to make India a pioneer in digital payments?
India has always been ahead on making the systems secure – India is the only country where every payment mode needs 2nd factor authentication. In India inputting a PIN actually re-assures the customer about safety of their own money rather than inconveniencing people. The only risks therefore people in India will have to be cautious about social engineering – someone asking for your PIN to transact without delivering the promised good. My personal belief is that cases of these frauds will rise in absolute numbers but as a percentage should be extremely low. Cash transactions have many more cases – digital cases just get reported more. More FIRs could actually mean crime rate going down while you may have more reports.
How has the pandemic impacted BharatPe’s business? What are the steps taken by your organization to create a robust digital payment ecosystem to move towards a cash-lite economy?
BharatPe is +40% in terms of value of transactions over pre – Covid levels. We transact close to INR 2,000 crores / month now. In terms of volume of transactions, we are at 80% of pre – COVID levels. We are now lending INR 1 crore / day which is again at pre – COVID levels. In fact we have also started our card acceptance business BharatSwipe during the COVID crisis where we are already doing INR 75 crores of value / month. So a small merchant does not need to step out of BharatPe for either QR or Card transactions. More importantly we are the default port of call for small merchants for working capital, the need of which has grown manifold in last 3 months due to lower business activity in general.
Your thoughts on financial inclusion in India as compared to other developing nations? What are the big innovations that will lead the way in the 2020s?
India is way ahead of even developed economies in payments, FinTech and financial inclusion. You should see the disbelief when you show a US based entrepreneur a UPI txn on QR and how seamlessly the funds move in and out of bank accounts in India.
2020 is all about credit now. The payment businesses as we know them and MDR economics is all but gone. Payments is the rails on which you have to lend to have a viable long-term business. So 2020s is about LendTech with 0% revenue on payments.