What is that one entity that everyone ‘feels’, but no one really sees? No, we’re not talking about God. In this world of emerging technology, it is the National Payments Corporation of India (NPCI), that one all-knowing entity that is being used by every Indian almost every day, but is never in the foreground.
To discuss the role of NPCI in the Indian fintech and mobile payments sector, TalentSprint CEO Santanu Paul hosted the first edition of the interactive session DeepTalk with Arif Khan, the Chief Digital Officer at NPCI.
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DeepTalk is an interactive series on emerging technologies where leaders, experts and trendsetters at the forefront of technological change discuss and share their unique perspective and knowledge on disruptive technologies like AI, ML, Blockchain, fintech, IoT and others, with community professionals.
“For example, every time you go to an ATM and withdraw cash in India, it is running through our system. We run something called NFS which is the ATM network of the country and has all banks participating. Or let’s say Google Pay, Amazon Pay or PhonePe — most of these actually run on our railroad UPI or BHIM UPI,” Khan explained.
NPCI’s flagship product, Unified Payment Interface (UPI) has revolutionised digital payments. UPI has already reached citizen scale and NPCI is working on making it grow multifold from here. With most major global payments players including Google and WhatsApp relying on UPI, India is fast emerging as the leader in the fintech space.
UPI-based transactions witnessed a new high of 955 million during September 2019, compared to a mere 1 million during December 2016, right after demonetization. If one goes back three or four years ago, India had a great product in the form of IMPS which was doing millions of transactions. Khan explained that despite its success at the time, IMPS was essentially a credit transaction where one could push money. “It was used for remittance and it was doing well. What we needed to supercharge the Indian payment ecosystem was a product which could do both — pull-push and debit-credit. It needed to be a product native to India and not something that we cut-paste from overseas. That’s when UPI came into being,” Khan told Paul.
Khan was asked about another major project by NPCI, RuPay, and how it is fast overturning the perceived ‘elitist’ nature of credit or debit cards. “Cards had never been for the masses in India, it has always been an aspirational product. After NPCI stepped into the scene a lot more banks have started issuing cards. We have 600 million debit cards already in the market, but we also have a credit card program that is running. RuPay has enabled an average Indian to actually carry plastic money in their wallet. Yes, the activation rate probably has not yet reached the level that we wanted, but it’s like owning a sleeping asset,” Khan explained.
Paul next asked Khan about the national electronic toll collection system. “We see signs of FASTag at highway toll booths. Where does this take NPCI from a growth perspective” he queried.
Khan replied happily that already more than 750 national highways had adopted FASTag. “The state highways are now beginning to come on board. Right now, the uptick is for commercial vehicles, followed by passenger vehicles. The way we designed it allows for new experiments and use cases. I think it will extend to parking solutions as well, because that’s an issue faced in most metros in India,” Khan said.
Khan also spoke about the NPCI’s role in financial inclusion and bringing more people on board. He said that at one level, NPCI is about cutting edge innovation and staying ahead of the curve. But there’s more to be done for those who haven’t adopted technology yet. Khan said, “India also needs someone to reach out to the unorganised sector, which is 70% of our economy. We have in UPI and AEPS two very powerful solutions for inclusion. When you look at India from a demographic point of view, it’s like a million communities and a thousand needs. How do we cater to these microsegments? Give them the right language options? Can we not have something very intuitive based on voice or gesture? Of course, there will be a question whether they have handsets, but we will let someone else solve that problem!”
