Exclusive interview with NPCI – instant payments and digital transformation in India

Monday 25 January 2021 10:55 CET | Editor: Raluca Constantinescu | Interview

The Paypers sat down with Dilip Asbe, MD and CEO of National Payments Corporation of India (NPCI), to learn more about India’s digital transformation and the status of instant payments in the region

How did the payments and commerce space evolve in India since the launch of UPI in 2016, and what are the key developments that can be observed today? 

The implementation of UPI transformed the way payments were made in India and ensured seamless interoperable transactions, both peer-to-peer (P2P) and peer-to-merchant (P2M). The core objective of the NPCI is to transform India into a digital society by creating an ecosystem that is accessible across the country and all strata of population. This needs continuous improvement of all our products to cater to different needs of the market. 

In the pre-COVID-19 phase, the Indian digital landscape was witnessing an exponential rise, with the total monthly UPI transactions crossing the 1 billion mark for 6 consecutive months (October 2019 – March 2020). The COVID-19 crisis has tested the preparedness of India’s digital capabilities, and UPI saw a sharp decline in March and April 2020, for the first time in many months – mainly due to the lockdown. However, we undertook the task of creating and launching the #IndiaPaySafe campaign along with the UPI ecosystem players to educate consumers about safe digital payments amid the pandemic. The overarching trend that was observed during the lockdown was the increased adoption of digital payments. 

India is a favourable market for the growth of the UPI network because of the encouraging government and regulatory policies, developing infrastructure, improved communication systems, expanding customer base, and ease of doing business. India has always been a nation that has been receptive to innovation, which made it an exciting platform for testing because of the scale and diversity that we have to offer. 

It is notable that 2020 has demarcated several major milestones for us as an organisation. One of them was the launch of ‘UPI AutoPay’ – which gives customers an option to create an auto debit mandate for all their recurring payments of up to Rs. 2,000 (EUR 23) on any UPI enabled app. Another milestone took place in Andhra Pradesh (state in the southern part of India), where over 15,000 village and ward secretariats were empowered with UPI-based payments. The drive, which was launched in association with NPCI and Canara Bank, is being seen as a progressive move to enable rural folk to go cashless through UPI. The introduction of QR codes for the facilitation of payments is expected to lay the foundation for hassle-free transactions and also empower thousands of villagers. 

What new functionalities and benefits should merchants expect to have access to when using instant payments? 

Driving financial inclusion and creating an evolved digital ecosystem to cater to the diverse requirements of the Indian population is the need of the hour. We, at NPCI, are tasked with the responsibility of onboarding merchants (from rural and urban areas) onto the digital payments ecosystem and providing them with streamlined business transactions, thereby reducing their dependency on cash. 

The recently launched UPI AutoPay will revolutionise the way merchants and customers perceive recurring payments by providing an additional layer of convenience and security across varying categories, especially the SaaS and content providing merchants. 

Some key benefits for merchants include: 

  • seamless fund collection from customers – using a single identifier like UPI ID (e.g. name@xyzbank); 

  • no risk of storing customers’ other sensitive payment details; 

  • market expansion, as customers just need a smartphone; 

  • in-app and link-based payments, suitable for remote payments; 

  • QR-based Scan and Pay (in contactless mode). 

As smartphone penetration increases worldwide, what is next on NPCI’s agenda to put this growth into service and further support real-time payments? 

The Government and RBI’s push to improve digital literacy across the country through a bouquet of initiatives spanning infrastructure, literacy, and ease of access to digital services had a significant impact on improving the overall digital maturity of the Indian populace. With the increased adoption of mobile phones and greater penetration of the internet, the awareness of digital payments started percolating into the grassroots levels of society. Additionally, we are constantly trying to inculcate the new technologies (AI, blockchain, ML, IoT, cloud computing, data analytics, tokenization) to create user-friendly experiences for today’s tech-savvy consumer. 

With our recently launched subsidiary firm NIPL (NPCI International Payments Limited), we are set to realise our ambition of internationalising UPI and other products by taking them to newer markets. Several nations have expressed an inclination towards replicating the unique payments system set up by NPCI in India. This is a great opportunity for us to work with participating nations and expand the acceptance network of UPI and RuPay in global markets. 

When it comes to the way people pay in India, can you share with us your prediction on what the future holds? 

It is thrilling to see India’s transformation from a cash-dependent economy to an economy known for its varied digital payments landscape. As part of the ecosystem, we still need to continue the investments into proactive cybersecurity systems, potent data protection initiatives, robust risk management, resilient systems, and an end-to-end, real-time grievance redressal mechanism. We have started the work on the real-time Online Dispute Resolution based on the RBI’s direction, and it is expected to offer a speedy resolution to customer complaints. 

As a national organisation, we have an obligation to grow and support the startup ecosystem. With that in mind, NPCI has started its API accelerator programme, where we have launched a marketplace of APIs from NPCI, banks, and other fintech players. This platform allows the developers to perform stub testing and reduce their turnaround time to launch their product with enabled fintech services. We are also reaching out to several accelerators to become their knowledge partner and assist startups in launching their products and connecting them with other stakeholders in the ecosystem. NPCI organises the Fintech Yatra (Journey) every year, and we end up touching as many as 100-200 startups. The 2020 Fintech Yatra is touching 500 fintechs, although virtually. 

While it is difficult to predict the future of the digital world, we can safely say that in India we aspire to reach a billion UPI transactions a day in the near future. 

This interview was first published in our Cross-Border Payments and Ecommerce Report 2020–2021, which assesses the change of pace that occurred in 2020 and provides a comprehensive overview of the major trends driving growth in this space, being the ultimate source of information for players interested in selling across borders. 

About Dilip Asbe 

Mr. Dilip Asbe has played a pivotal role in designing, building, operationalising, and managing large scale innovative payments processing platforms like UPI, BHIM, IMPS, and India’s home-grown card network RuPay. He has been instrumental in designing AEPS and defining MicroATM standards for interoperable financial inclusion along with the team at UIDAI. 

About NPCI 

National Payments Corporation of India (NPCI) was incorporated in 2008 as an umbrella organisation for operating retail payments and settlement systems in India. NPCI has changed the way payments are made in India through a bouquet of retail payment products such as RuPay card, IMPS, UPI, BHIM, BHIM Aadhaar, NETC FASTag, and Bharat BillPay.

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Keywords: Dilip Asbe, National Payments Corporation of India, NPCI, interview, India, digital transformation, instant payments, UPI, merchants, smartphone penetration, real-time payments
Categories: Payments & Commerce
Countries: India
This article is part of category

Payments & Commerce