The future of money is digital, according to one of the largest card network operators in the world, whether it is online digital payment or cryptocurrency. Keeping the needs of customers at the forefront has always been a priority for one of the world’s largest financial service providers. Alfred Kelly, global CEO of VISA, sees a shift in the strategy used for the market space not only in India, but globally. Arijit Barman, Deputy Resident Editor at The Economic Times, speaks to Kelly to learn more about the future of money, rising competition in the money movement and payments business, and the company’s plans to expand its network.
What will be your focus in terms of investments and strategy in a market like India, given the massive disruption in the payment space, as the country’s largest card network operator?
India is one of the exciting places in the world. It’s been a pleasure travelling within the country. We have a presence of over 40 years. Operating in the country since 1980, Alfred Kelly Jr believes that India is still a big cash society, as you know, yet it has drastically changed quite a bit in the last five and a half years. We’ve seen 40% growth just in the last year. And our share in the country is about 50%. And a lot of this comes because foundational elements of payments is the fact that it’s an infrastructure and it comes with lots of different partners. And we partner with traditional financial institutions. We partner very closely with fintech, we partner very closely with merchants.
So, we see India in short, as a market that has grown tremendously in payments in the last six years. But it’s still in the early part of a growth trajectory that I see happening over the next ten to 20 years. And I think what we’ll see in India in this meeting in 2042 will be unrecognizable from where it is today in 2022, most certainly.
Given your legacy offerings, you’ve branched out into newer innovative work that touches on the fintech space as well. However, with UPI payments reaching over 5 billion transactions per month, the Reserve Bank of India (RBI) may become involved in wallets and digital commerce. Do you see this as a threat in light of the increased competition in India?
No, competition is something we have to deal with every day. Money management and the payments industry is a thriving industry. Nonetheless, I must admit that the RBI is one of the most progressive regulators, with the potential to replace the entire concept of cash. They are pioneers in implementing additional safeguards in the overall ecosystem, particularly for fintech.
Doing business in a country like India has been an honour. We have always been in compliance with all of the RBI’s regulations, such as data and localization rules, as well as tokenization, which helps protect all transactions. Smart regulation is good in every country because it promotes good and fair competition, which is what draws us to a country like India and makes the country’s future look brighter.
India has really emerged into digital payments in a relatively short period of time, the changes in the last five and a half years are truly monumental. Any regulator would be trying to figure out what the right things are to do, which is where I find the intentions of the RBI very positive. There have been some instances when the change in position has been challenging. There is a possibility that the regulator and the firm may not always go hand-in-hand.
Data privacy over the years has come under considerable scrutiny. Can give you perspective on how it should be stored and linked?
Yes, data is the new oil. It is a very powerful ingredient towards companies trying to gain competitive advantage through insights. And as we look ahead to things like artificial intelligence and machine language, the various capabilities that you have relative to data just get enriched. Data protection becomes very essential and helps us provide more value to the consumers. We will work with whatever the conditions are to make sure that regardless that we are doing our part to be good stewards of data and protecting data very carefully and protecting the Privacy of the end customer.
Fintechs have grown rapidly, particularly during the pandemic. How do you see your Visa strategy evolved around fintech in India? Are you setting up an investment platform, like a seed fund to partner with fintech companies in India?
Essentially, we are the first great fintech story. Fintechs in the past have been a fantastic addition to the payments and money movement ecosystem. We support the emerging fintechs, and our success story involved Paytm, which has reached over eight and half million credit and debit credentials. We’ve also worked with them on 280,000 acceptance points, which is up 50% year over year. RBI has helped been a catalyst through their program, their Sandbox program, which has helped bring companies like ours together. Thanks to the Visa accelerator program which brings identifies fintech throughout the country. We put in place something called the Visa Fast Track program, which allows fintech to connect with Visa without having to go through too many bureaucratic steps because these tend to be small companies that are very agile and want to move fast.
Fintech and innovation are synonymous. Google launched Google Pay in India and then took it to the world. Similarly, the development center in Bengaluru is the key to your firm globally, do you see more and more India-first innovations?
We’ve continued to be enormously impressed with the talent pool in India. We have 1800 engineers at the development center that you referenced, and they are dedicated to state-of-the-art development. Some of them are India-first, but some of them are just work that goes into global platforms that help clients in every single country around the globe. Take for instance, Visa Safe Clip was developed here in India by our engineers here, which allows merchants around the world. Online merchants currently need to comply with one secure click with the RBI two-factor authentication mandate. And we believe with that capability, Visa Safe Click, which we are piloting in India, it has great promise to go around the world.
As a company, you’ve been a big proponent of open and interoperable payment strategy, which is talking about the network strategy. Within the fintech space, are there some sweet spots that Visa wants to deep dive into for instance, the SME, small and medium enterprise financing, or even the BNPL (buy-now-pay-later) product, or neo banks? Are there pockets such as these within the fintech spectrum that you find exciting?
Well, I say all the above, and we don’t have time to talk about all of them, but in particular, we’re looking to really help small and micro businesses around the world. They’re so key to the economies of so many countries. This is true for India and the US. Over the next three years, we intend to target digital capabilities of 50 million small businesses and micro enterprises around the world. Most of these businesses have adapted well during the pandemic.
So will you be launching your own line of products or do acquisitions for the same?
Our view is to come up with the best solutions internally the fastest. But we’re not afraid to acquire if that is the best route for the future. Expect to see us come out with proprietary offerings across a wide array of capabilities and solutions.
What is the future of money? Is cash or centralized finance under threat as more and more people get used to cryptocurrency? Do you see regulators getting comfortable in India?
The future of money is digital, however, no matter how it manifests itself. It’s yet to be seen how successful buy now pay later is. We are yet to see how various elements of crypto pan out, or are people comfortable with the traditional credentials, or leveraging RTPS. Ultimately, we want to enable and be centrally involved in all of them and ultimately the choice is upon the consumer, based on what is providing them, the best user experience, and the best value. I believe our job is not to tell the consumer what they should do. Our job is to enable as many options as we can for them, and they’ll ultimately decide what works for them.