Digital payments continued to grow at a robust pace and touched a new record in August with further easing of lockdown restrictions by many States and resumption of economic activities.
Unified Payments Interface registered 355 crore transactions worth ₹6.39 lakh crore in August 2021, according to data released by the National Payments Corporation of India on Wednesday. Transactions on the UPI platform had breached the ₹6 lakh crore-mark in July to amount to ₹6.06 lakh crore.
The Immediate Payment Service (IMPS) also witnessed a sharp growth in transactions. The number of transactions on the IMPS platform rose to 37.79 crore in August and valued at ₹3.18 lakh crore. It had processed 34.97 crore transactions amounting to ₹3.09 lakh crore in July.
Payments on NETC FASTag crossed 20 crore in terms of volume in August to 20.12 crore. In value terms, it amounted to ₹3,076.56 crore. In contrast, 19.23 crore transactions worth ₹2,976.39 crore were processed on NETC FASTag in July.
Aadhar Enabled PaymentSystem (AePS) transactions, too, scaled the 10-crore transaction mark last month. As many as 10.84 crore payments worth ₹27,353.87 crore took place through AePS in August compared to 8.88 crore transactions totalling ₹23,447.11 crore in July.
The BharatBill Pay platform registered 5.88 crore payments totalling ₹10,307.4 crore in August versus 5.1 crore transactions amounting to ₹9,612.87 crore in July.
“We believe that continued opening of the economy and markets coupled with the upcoming festive season would enable spends to grow at a better pace over the medium term ,” Motilal Oswal had said in its Digital Payments Tracker report for July that looked at card and UPI spending.
In one of the largest deals in India’s booming fintech sector, Naspers’ technology investment arm Prosus on Tuesday acquired Mumbai-based BillDesk for $4.7 billion. The acquisition is being done through Prosus’ global fintech business PayU.
“The proposed acquisition will see PayU, the payments and fintech business of Prosus which operates in more than 20 high-growth markets, become one of the leading online payment providers globally by volume,” Prosus said in a statement.
PayU India and BillDesk run complementary businesses and the two expect to create a financial ecosystem handling four billion transactions annually, which would be four times PayU’s current level in India. The combined entity would have a total payment volume (TPV) of $147 billion. Founded in 2000, BillDesk had a TPV of over $90 billion in 2020-21. PayU has a TPV of $55 billion across India, Latin America and EMEA.
PayU’s fourth buy
This is the fourth acquisition by PayU in India after CitrusPay, Paysense and Wibmo. This marks the largest exit by an Indian start-up through an acquisition, zooming past Snapdeal’s $400-million acquisition of Freecharge, and BYJU’s $950-million buy of Aakash Educational Services.
Bob van Dijk, Group CEO of Prosus, said: “We’ve invested close to $6 billion in Indian tech to date, and this deal will see that increase to more than $10 billion… Along with classifieds, food delivery, and education technology, payments and fintech is a core segment for Prosus, and India remains our No 1 investment destination.”
Noting the complementarity of the two companies, Dijk said in a media call that payments systems need scale to be efficient.
Anirban Mukherjee, CEO of PayU India, said the company hopes to provide a full fintech ecosystem of diversified products. “We will take time to figure out how to bring the platforms together. Anything we do will be in consultation with the RBI,” he said on the roadmap.
MN Srinivasu, Co-founder of BillDesk, said in a statement that the investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the RBI.
Prosus, which came from Naspers, invests in areas including health, logistics, blockchain, and social commerce. It is known for its 28.9 per cent stake in Tencent and has also invested in Indian firms including Swiggy.
This is the first initiative between the two countries that links the retail payment system operators within them and is expected to smoothen interconnection and pave the way for customers, merchants, and operators for the full commercial launch in 2022. More participating banks/non-banks are expected to join till then.
The development reflects the commitment of ASEAN member countries towards the ASEAN Payment Connectivity initiative. In April 2021, The Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT) launched the first ever payment link between two countries. While Malaysia and Thailand launched a similar link in June 2021.
ASEAN member countries aim to achieve cross-border real-time retail payments in the region by 2025.
Mr. Sugeng, Deputy Governor of BI said, “This initiative is a milestone of the Indonesian Payment System Blueprint 2025, especially in retail payments. It links cross-border payments through the interconnection of national QR codes of our two countries. One interesting aspect of this project is the use of direct quotation of local currency exchange rates provided by the Appointed Cross Currency Dealer (ACCD) banks under the Local Currency Settlement (LCS) Framework to improve the efficiency of the transactions, thus lowering transaction costs. The significant expected outcome of this first cross-border payment project is not only to facilitate transactions in the tourism sector but also to assist SMEs in tourist areas. This project will also increase financial inclusion, inclusive digital economy, and e-commerce transactions. This pilot, which BI calls an ‘industrial sandbox’, is on the path to further expansion of cross-border payments in the region.”
While Ronadol Numnonda, Deputy Governor of the BOT said, “The Bank of Thailand underscores the significance of this cross-border payment system connectivity, having continuously pursued similar initiatives in the region recently under the ASEAN Payment Connectivity initiative. We believe that this cross-border QR payment will result in a safer, more efficient, and cost-attractive alternative for retail payments by the general public. Also, this service will assist e-commerce businesses during these challenging times and lay the foundation for the anticipated resumption of tourism and business flows. More importantly, our cross-border payment linkage with ASEAN’s largest country will be another key catalyst in transforming the way ASEAN citizens make payments abroad, thus contributing to regional economic prosperity and digitalization.”
Amid the Covid-19 pandemic in the country, fintechs have been at the forefront of India’s financial inclusion efforts. Among the new crop of fintechs in the country, Panchkula-based RBP Finivis is rapidly expanding its footprint. In an interaction with Financial Express (Online), its director & chief executive officer Sam Gupta shared his views on Covid-19’s impact on the fintech industry, the importance of financial inclusion, and RBP Finivis’ growth and expansion plans. Edited excerpts:
India has a strong banking system. Why do you think fintechs are crucial for financial inclusion in India? The implementation of financial inclusion held in the 1960s kept an eye on the economic development in India with the nationalisation of banks. The regulator advised all banks to include financial inclusion in their business outreach. Since then, its progress was monitored by the Reserve Bank of India (RBI) through the implementation of Financial Inclusion Plans (FIP) in terms of predetermined parameters. The key role of fintechs in financial inclusion is by making changes in the traditional business model of banks and financial institutions; it can deliver financial products and services to the financially excluded population in a more accountable and efficient manner in the least possible time.
How has Covid-19 impacted the Indian fintech industry and your business? The pandemic has considerably accelerated the adoption of digital payments, and seen lending solutions grow at a breakneck speed, resulting in the mass inclusion of factions of the society that were ill-served by traditional financial methods. The usage of digital and contactless payments surged during the pandemic, as people opted for safer ways to transact financially. Our business and employees have been impacted, too, by the pandemic. In terms of business, we have seen more digital transactions during this period.
Amid the pandemic, when do you see revival in the fintech industry?
We do not see the pandemic as a lost opportunity; rather it has generated unexpected revenues that were never imagined. The fintech industry has seen a steep rise in the number of transactions amid the lockdown. The year 2020 is seen to be a boom for the industry and things are happening at a fast pace. To an extent, the pandemic has proved beneficial for the fintech industry players to execute their plans and try to maximise reach with their offerings.
There are already established players like Paytm and PhonePe, etc. present in the Indian fintech market. What makes RBP Finivis different from others?
Our unique offering in the market for the B2C segment is a key differentiator from other existing players. We have a qualified technology team with 10 years of experience. Digital India success is our main mantra which we leverage in our services and offerings. The launch of MEGO will be path-breaking in the fintech industry. And, an important factor that the products such as AEPS (Aadhaar Enabled Payment system) and Micro ATMs are not operated by Paytm and PhonePe like brands.
What is MEGO Pay ATM? How is it different from other bank ATMs? MEGO conceptualises the key digital offering of RBP Finivis. Micro ATM is one of the core components of our offerings. The device includes a card reader with features of deposit, balance inquiry, and cash withdrawal from all bank debit cards. It is a mini version of large ATMs with a POS (point of sales) terminal. Micro ATM facilitates the feature of a swipe machine to connect with the core banking system. With our micro ATM services also known as mini ATM services in India, we are determined to change a common man’s life.
What is your present market share and who are your competitors in the market? Our market share is minimal at present. By 2021-end and 2022 we would have a percentage in the overall market share as we operate in both B2B and B2c segments. Our competitors are Paytm, GooglePay, Mobikwik, and PhonePe.
How many states/markets do you have a presence in now? Any expansion plan?
We are currently based out of Panchkula (Haryana) and have a research team operating from Kolkata. We have plans to expand our branches and services to a number of states which include Delhi NCR, Assam, Mizoram, Tripura, Arunachal Pradesh, Himachal Pradesh, Jammu & Kashmir, Punjab, and Haryana.
What is the size of your customer base, and its growth rate? With the introduction of artificial intelligence (AI) which will increase the efficiency of digital payments, and during the pandemic, the trend has seen an immense upsurge in terms of usage of it (digital payments). It will change the complete dimensions of the Indian economy. Our target segments are school and college students, unemployed youth, rural people, and consumers who are market smart and look for discounts and offers in their spending. In our B2C offerings, we provide unique and advanced technology-enabled features to our consumers to redeem their offers and cash backs via web app and cards. Bringing digital banking to rural India is our main target to achieve by acquiring 15% of the rural subscribers base.
Where do you see RBP Finivis in the next two years, in terms of company size (number of employees), revenue, and growth?
We are driving on 12% steep growth and plan to accelerate it in the second half of the year. In the next two years, we are aiming to enroll 500+ employees on the payroll. And in terms of growth, we are considerably aiming at a gross turnover of Rs 4,000 crore in 2021 and Rs 9,000 crore in 2022.
When are you expecting to break even?
We expect our break-even by July 2022 with a turnover of over Rs 200 crore. We could have achieved break-even much earlier but due to Covid-19 things got slow after the lockdown.
Prime Minister Narendra Modi will launch e-RUPI, a person and purpose specific digital payment solution on Monday via video conferencing. The event will take place at 4.30 pm. e-RUPI is a cashless and contactless instrument for digital payment.
What is e-RUPI e-RUPI is a QR code or SMS string-based e-Voucher, which is delivered to the mobile of the beneficiaries. The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the service provider.
e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without involvement of any intermediary.
Can also be used for other government schemes It can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana besides fertilizer subsidies.
A PMO release said that the Prime Minister has always championed digital initiatives. Over the years, several programmes have been launched to ensure that the benefits reach their intended beneficiaries in a targeted and leak-proof manner, with limited touchpoints between the government and the beneficiary. The concept of electronic voucher takes forward this vision of good governance, the release said.
Another tool for good governance Over the years, several programmes have been launched to ensure that the benefits reach its intended beneficiaries in a targeted and leak-proof manner, with limited touch points between the government and the beneficiary. The concept of electronic voucher takes forward this vision of Good Governance.
Mobile telephony & India While the DBT scheme relies on the troika of Jan Dhan accounts, Aadhaar numbers — although Aadhaar is not mandatory — and mobile phones, the e-RUPI system will not require users’ bank account details. The only requirement is for the beneficiary’s mobile phone number. The DBT scheme notes that it relies on 100 crore mobile connections to reach aid to beneficiaries.
Federal Reserve Governor Lael Brainard laid out a range of reasons for “urgency” around the issue of developing a U.S. central bank digital currency, including the fact that other countries such as China are moving ahead with their own.
“The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC (central bank digital currency)offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that,” Brainard told the Aspen Institute Economic Strategy Group. “That just doesn’t sound like a sustainable future to me.”
Fed officials are taking a deep dive into the digital payments universe, collecting public feedback on the potential costs and benefits as well as design considerations with a view to publishing a discussion paper in early September.
Fed Chair Jerome Powell in comments earlier this month described the analysis as a key step in accelerating the Fed’s efforts to determine if it should issue its own CDBC.
“One of the most compelling use cases is in the international realm, where intermediation chains are opaque and long and costly,” Brainard said on Friday.
But there are domestic reasons too for a U.S.-backed digital currency, she said: the dramatic rise in stable coins, a form of cryptocurrency pegged to a conventional currency such as the U.S. dollar but not backed by any government.
Stable coins could proliferate and fragment the payment system, or one or two could emerge as dominant, she said. Either way, “in a world of stable coins you could imagine that households and businesses, if the migration away from the currency is really very intense, they would simply lose access to a safe government-backed settlement asset, which is of course what currency has always provided.”
A CBDC could also help solve other problems, she suggested, including the difficulty during the pandemic of getting government payments to people without bank accounts, who also tend to be the very people who need the payments the most.
E-commerce major Flipkart has touched 42 million transactions on its credit offering Flipkart Pay Later. With over 2.8 million customers transacting through Flipkart Pay Later, the company is targeting a 2X growth over the next six months. The expansion will include making ‘Pay Later’ available on other partner channels as well.
Plan to cross 100 million transactions
Flipkart Pay Later claims to have observed a 70% adoption rate among customers at the time of order check-out. The company now aims to cross the 100 million transaction benchmark by the end of the year. Flipkart Pay Later has also seen an increase of over 50% in the number of registered users as of July 21, 2021 in comparison to last year.
Customers are said to have used the Flipkart Pay Later mainly for purchases across categories of beauty and general merchandise, home and lifestyle. Ranjith Boyanapalli, Head – Fintech and Payments Group at Flipkart, said, “The success of Flipkart Pay Later so far has shown the benefits that the construct is able to provide to millions of customers and has made us confident of its market-readiness for a much wider adoption – both on and outside Flipkart Group’s platforms.”
Flipkart Pay Later offers customers affordable credit solutions for shopping. It is a 30-day credit product that does not have an interest fee and can be operated without an OTP for most transactions. According to a recent TransUnion Cibil-Google report, small-ticket lending has gone up from 10% in 2017 to 60% in 2020. Customers are increasingly relying on fintech companies for their credit demand which has been accelerated during the pandemic.
Started in 2007, Flipkart claims to have a registered customer base of over 350 million and offers 150 million products across 80+ categories. Flipkart Group includes group companies Flipkart, Myntra, Flipkart Wholesale, and Cleartrip. The group is also a majority shareholder in PhonePe, one of the major digital payments companies in India. Other players competing with Flipkart Pay Later include LazyPay, and Simpl.
With consumers increasingly opting for digital transactions over cash ones, and with the simultaneous growth in e-commerce and internet penetration in India, digital payments are expected to continue on an upward trajectory.
UPI-based digital payment apps, which were on a growth trajectory even before the pandemic, are thriving in the new normal. A joint report by research firms Worldpay and FIS says 39.7% of India’s e-commerce payments were done through digital wallets in 2020 and wallets have now become the leading online payment method in the country. With consumers increasingly opting for digital transactions over cash ones, and with the simultaneous growth in e-commerce and internet penetration in India, digital payments are expected to continue on an upward trajectory.
The transition of small businesses to online media has also led to this growth. As per data by EY, UPI-based digital transactions have increased by 110% in volume and 109% in value, from June, 2020 till June, 2021. For most payment instruments, including UPI, debit and cards, and those at point-of-sales, the ticket size had come down during the first wave.
Nilesh Naker, partner – fintech, EY, says over the past few months, however, there has been a significant rise in ticket sizes. Spends through UPI have seen a rise of 29% in the average ticket size of transactions during the pandemic, year-on-year, from June 2020 till June 2021. “It shows that people are now comfortable using digital payments and willing to transact with higher amounts,” he notes.
Mahendra Nerurkar, CEO, Amazon Pay, shares that the company launched the ‘Amazon Pay Later’ feature in April, 2020. “Since then, we have recorded two million customers using the feature on the platform with around 10 million transactions clocked till June, 2021,” he says. Similarly, PhonePe saw 50% month-on-month growth of new customers on its app from April, 2020 till June, 2021. Karthik Raghupathy, VP, strategy and business development, PhonePe, says, “Last year, we improved the ‘Stores’ discovery segment of our app with the addition of a remote payment option, information on merchant store timings, and chat options that connect consumers with their local grocery shops, pharmacies and other essential service providers.”
PhonePe recently launched a cash on delivery (COD) solution this month. Through a QR code, customers can pay for COD digitally through the app at the time of delivery. “This will drive contactless payments for customers who are traditionally more comfortable with cash on delivery,” adds Raghupathy. PhonePe claims that its user base has grown from 200 million in March, 2020 to more than 300 million, currently.
Akshay Mehrotra, co-founder and CEO, EarlySalary and founding member, Fintech Association for Consumer Empowerment (FACE), says, “Digital payments have become significant not only for online platforms but also for in-store shopping.”
Vivek Belgavi, partner and leader, fintech, PwC India, observes that with the lifting of restrictions and the economy opening up, there may be a slight change in consumer behaviour. Digital payments will continue to be relevant though, he says.
With WhatsApp Pay receiving the go-ahead with a user-base cap of 20 million in November 2020, things are likely to get even more of a fillip because of the sheer scale of WhatsApp as a chat platform. Naker says, “We expect a growth trajectory as high as 10-15 times that of the current UPI transaction market over the next three to five years.”
ICICI Bank and Amazon Pay have announced that the Bank has crossed the milestone of issuing two million ‘Amazon Pay ICICI Bank‘ credit cards. In the process. Having been introduced in 2018, the card has emerged as the fastest co-branded credit card to cross this milestone in the country.
The card also holds the record of being the fastest co-branded credit card in India to cross the milestone of one million issuances in October last year. Thereafter, the card has onboarded another one million customers in the last nine months, with over 80% of new customers availing the card completely digitally, without any physical interaction.
Any registered customer of Amazon.in, including those who are not customers of ICICI Bank, can apply for the card digitally, from anywhere in the country. This is among the first credit cards in India which introduced ‘Video KYC’ for customers in June 2020.
“The Amazon Pay ICICI Bank credit card has received an exciting response from customers across the country. The best-in-industry rewards, seamless access to credit and the easy onboarding process are the key contributors of this excitement.” said Sudipta Roy, Head – Unsecured Assets, ICICI Bank.
“At Amazon Pay, we are transforming the way customers make digital payments. The Amazon Pay ICICI Bank credit card is one of the most rewarding, convenient and trusted payment experiences in the country. Over 2 million customers have shown their trust in us and how they value the experience.” said Vikas Bansal, Director – Amazon Pay India.
The reward earnings are credited monthly, after the billing cycle date of the card to the customer’s Amazon Pay balance. They can redeem these earnings to purchase from more than 16 crore items available on Amazon.in across. The reward earnings can also be used with Amazon Pay partner merchants for transactions like flight tickets, booking hotels, food delivery, movie tickets and much more.
“We’re delighted that the Amazon Pay ICICI Bank credit card powered by Visa has crossed two million cards, with the last one million cards issued in less than a year, despite the ongoing pandemic. This reinforces the belief that consumers prefer cards that give them great rewards and ease of payment.” said Shailesh Paul, Head of Merchant Sales & Acquiring and CyberSource, India and South Asia, Visa.
With the gradual opening up of the economy from June, digital payments also shot up last month after subdued transactions in April and May.
Payments through the Unified Payments Interface touched a record high and neared the ₹5.5 lakh crore mark in June, according to data released by the National Payments Corporation of India.
As many as 280 crore transactions worth ₹5.47 lakh crore took place through UPI last month as against 253 crore transactions totalling ₹4.9 lakh crore in May.
This is only the second time that UPI payments crossed the ₹5 lakh crore mark. It was previously at ₹5.04 lakh crore in March, after which it fell for two consecutive months.
Payments on the Immediate Payment Service (IMPS) platform also registered growth in June. Over 30.3 crore transactions worth ₹2.84 lakh crore took place through IMPS as compared to 27.9 crore transactions amounting to ₹2.66 lakh crore in May.
Transactions on Bharat BillPay saw even more robust growth with 4.54 crore payments worth ₹7,934.71 crore in June. In contrast, it had registered 3.92 crore transactions totalling ₹6,270.31 crore in May.
Transactions on the Bharat BillPay platform have been rising all through April and May when there were localised lockdowns, with more people choosing to use it for payment of utility bills.
Payments through NETC FASTags also recovered in June but were still subdued compared to April levels. It recorded 15.78 crore transactions worth ₹2,576.28 crore in June as against 11.64 crore payments totalling ₹2,125.16 crore in May.
Transactions through Aadhar Enabled Payment System (AePS) also registered a sharp growth last month totalling 8.75 crore in volume worth ₹24,667.8 crore. In contrast, there were 8.42 crore transactions worth ₹24,619.24 crore in May on the platform.
Financial Express is now on Telegram. 