The government is actively pushing people to adopt digital payments at present. If earlier, it was for convenience, now with social distancing amid the COVID-19 crisis, it has become mandatory, says Dilip Asbe, MD & CEO, NPCI in a freewheeling interview with Arindam Mukherjee. Edited excerpts:
What kind of growth has the digital payments industry seen in the last two months, ever since the pandemic and lockdown have started?
The offline-to-online switch in payments has been long in coming, however there has been an accelerated shift in consumer behaviour in the recent lockdown scenario due to COVID-19. NPCI has been urging and reaching out to consumers and all service providers of essential services to switch to digital payment methods to stay protected. We are seeing growth in essential categories, online donations, and entertainment on the OTT medium. There has been a dip in volumes as discretionary spends, and some of the segments like travel, hospitality are near to zero.
We are also working with several ecosystem players who are looking at innovative solutions to solve the current problems.
The first big wave was post demonetisation when we saw a large scale adoption of digital payments. The second big wave came during the pandemic and lockdown. Do we see a larger adoption of digital payments?
The current situation calls for digital payments. Earlier, digital payments were about convenience but in this environment, it is practically mandatory from the safety point of view. That is why the government and Reserve Bank of India are pushing for it continuously. We will eventually come out of the lockdown but to get back to normal will take some time. Just like people will continue to wear masks and wash their hands, it will be equally important to use digital payments.
In the current environment of social distancing, we have initiated #IndiaPaySafe through our on-going ‘UPI Chalega’ campaign, to create awareness about paying safe with digital payments. We hope we can encourage a lot of people, who have been used to handling cash, to switch to digital payments and cultivate a habitual change. The campaign drives a broader message across the public in terms of using UPI as an easy, safe and instant way for digital payments. We have also tried to use certain celebrities to push the cause. We have created UPIChalega.com microsite, where all useful information on how to use UPI safely can be found. We ran a challenge on Tiktok and it attracted over eight billion views.
All these numbers are important because we feel our message have made an impact and we have seen an increase in the number of users for UPI and RuPay and other digital payments.
What kind of changes have we perceived in the digital payments space in the last two months?
In the current situation, both the customers and merchants are preferring to transact with social distancing. The trend is interesting on the P2M (person-to-merchant) side as we are seeing transactions, which are focused on critical purchases. On the P2P (person-to-person) payments, we have seen a decline due to social distancing. On the other hand, payments like those to the staff or workers in a small company and by families to their drivers and domestic helps are happening on UPI.
In rural areas Aadhhar-enabled Payment System. (AePS) is a critical product as DBT transfers are being made and people need to access these funds close to their houses. People are able to get the funds from Business Correspondent (BC) outlets.
It is seen that customers are preferring contactless cards, contactless payments in UPI or scan and pay and link-based payments. We are trying to make changes in our products as we see that need and way to pay is changing rapidly.
Do you expect digital payments to become the de facto norm in the country at least for the short to medium term?
As public health emergency due to COVID-19 continues to unfold, one thing is clear: the economic and human impact of this virus is significant. In the first place, coronavirus is significantly altering how consumers shop and how they make payments. Consumers are now increasingly becoming ready to embrace digital payments.
Going forward, consumers and small businesses will have a greater opportunity to pay and be paid virtually, without the need to physically go to a store, visit the bank or handle cash. As COVID-19 forces us all to adapt to potential changes in how we live, interact and handle our daily tasks, we can be confident that digital payment solutions will continue to improve, providing more immediate access to funds, especially for those who need it most. However, cash is still prevalent and we hope to see a good change in next 18 to 24 months.
What is the long-term picture?
The payments industry, already one of the most dynamic sectors in financial services, continues to evolve, propelled by technological and operational innovations. India is becoming an exciting platform for development and testing of new payment technologies. Thanks to RBI and government policies, India is treated as an innovation hub for digital payments. Emerging technologies that are being slowly adopted across the globe are likely to be soon tested in India.
Consumers expect to buy anytime, anywhere, they choose, making them no longer partial to just one payment mechanism. They are going ahead with whichever channel and payment method suits them. Payments are also being added into new disruptive technologies such as voice assistants, wearables and IoT devices.
The contribution of fintech startups in digitalising the economy is important and hence NPCI wants to act as a catalyst for bridging the gap between the established financial entities and the startups. By encouraging open discussion among startups and established entities, we hope to lead to collaborations benefiting the nation.
Is there any new innovation or practice, which the industry has adopted, to increase adoption of digital payments?
We are working very closely with the ecosystem players who are really looking at innovative solutions, to help wherever we can. We are also working on some ideas that should help people in this environment. For example, people have become very used to paying by UPI through QR. Currently, consumers are actually avoiding going to the store. Similarly, merchants too are avoiding too many consumers. There are also payment service providers who are coming up with innovative means, such as apps which tell you about merchants around you and by following a link, you can buy goods using UPI. Another method is that of the merchant sending across a UPI ID and through which a payment is being made. These solutions were not popular earlier.
We are going to see solutions come up and merchants move more into the ‘Phygital World’, so they do not have to go completely online. People would be able to call in or use some messaging mechanism to place orders or communicate by exchange of photographs, saying what they want to buy and ultimately the payment can happen digitally. Somebody goes and picks up the goods or these are delivered.
Post lockdown, it is going to be a phase where we will still have to be cautious and take extra precautions to stay safe until the world has really gotten rid of this situation. This period is all about creating those solutions and innovating to solve these needs for the public, merchants and businesses.
What kind of support has the government provided to push digital payments?
In the current lockdown situation, along with RBI and the government, we are requesting citizens to switch to digital payment methods to stay protected. NPCI and other state governments are ensuring more vendors of essential services are on digital platforms. The government has taken to social media to encourage the use of online payments and discourage cash usage. The RBI and the government are constantly reiterating multiple digital payment options available for customers in their day to day transactions such as NEFT, IMPS, UPI and BBPS that are available 24*7.