A decade-and-a-half ago, it would have been impossible to imagine an alternative to the ubiquitous Visa and Mastercard. Card payments were synonymous with these names and they ruled urban India. The Reserve Bank of India was well aware of the need for a domestic payments network and created a Department of Payments and Settlements. But it was not easy to challenge the domination of MNCs in the payments space.

“Old habits are hard to break and new habits are hard to form. But if one is determined, then change is bound to happen,” says Dilip Asbe, MD and CEO of National Payments Corporation of India (NPCI). Asbe, like his predecessor AP Hota, has been working to change the way India makes payments. “There is a need to make people aware about the ease and simplicity of doing digital transactions,” Asbe says.

NPCI has taken upon itself the mission of not only making India a less-cash society but also ensuring that digital payments become easy as well as safe. When Hota, founder-CEO of NPCI, joined the Department of Payments, the mandate was to supervise payments systems, and, alongside, create a domestic card payments network

By 2008, when NPCI was set up as an umbrella organisation for all retail payments systems in India, Hota was sent to the corporation on deputation. NPCI was set up as a not-for-profit company, with the support of the RBI and Indian Banks’ Association (IBA). Its ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC. In 2016, the shareholding was broad-based to 56 member banks to include banks representing all sectors.

While NPCI has been steadily gaining ground in the Indian financial system through the Cheque Truncation System, Aadhaar-enabled Payments system, RuPay Card, Immediate Payments Service, Unified Payments Interface, BHIM app and Bharat Bill Pay, the journey has not been an easy one. NPCI started out from a small office in Churchgate and had to remind promoter banks to depute officers.

NPCI’s first milestone was the setting up of the National Automated Clearing House (NACH) — a web-based solution to facilitate inter-bank, high volume, electronic transactions that are repetitive and periodic in nature.

One of its most successful products remains the RuPay Card, which was launched in 2012. A combination of Rupee and Payment, RuPay is NPCI’s card payment scheme, conceived to fulfill the RBI’s vision to offer a domestic, open-loop, multilateral system that will allow all Indian banks and financial institutions in India to participate in electronic payments.

The biggest advantage of RuPay is its low cost and affordability. Since the transaction processing happens within India, it leads to a lower cost of clearing and settlement for each transaction. This makes the transaction cost affordable and is driving usage of cards in the industry. Moreover, the transaction and customer data related to RuPay card transactions resides in India, unlike with Visa and MasterCard.

But rolling it out was not easy. Hota, in an interview, said that at one point, the business appeared to be collapsing when Verifone, the largest point-of-sale (PoS) terminal manufacturer, refused to accept RuPay cards. To promote the acceptance of RuPay, it was important that it be swiped at most PoS terminals but Verifone, with 80 per cent market share, was reluctant. It demanded a fee of ₹200 per terminal for updates. “We ended up paying around ₹20 crore to Verifone for its one million terminals. It was more than what we had spent on developing the payments infrastructure,” Hota had remarked.

But NPCI’s willingness to make the payment only helped the RuPay card gain wider acceptance. It now accounts for almost 50 per cent of the debit cards issued in India.

By 2013, NPCI had implemented inter-bank ATM transactions, clearing and cheque truncated systems. This eliminated the physical movement of cheques in the clearing process and instead an electronic image of a cheque would be sent along with relevant information to banks.

But the best was yet to come. In 2016, NPCI rolled out its Unified Payments Interface (UPI) — a system that powers multiple bank accounts into a single mobile application, merging several banking features, seamless fund routing and merchant payments into one. This allows for immediate money transfers through mobile devices, round the clock — even on bank holidays. It offers single-click, two-factor authentication besides seamless single-click payment.

UPI became the backbone of the Bharat Interface for Money (BHIM) — an app that lets users make quick payments. Users can make instant bank-to-bank payments and pay and collect money using just a mobile number or Virtual Payment Address (UPI ID). It can be used to send money, request money and scan and pay. Available in 12 languages, including Hindi and English, BHIM remains one of the most robust apps for financial transactions.

Saket Modi, CEO and Co-founder, Lucideus — the IT risk assessment and digital security services provider for BHIM — says NPCI officials’ insistence on security around the app is unparalleled. “All the digital transactions in the world involve two-factor authentication. BHIM is the only app with three-factor authentication,” he says.

Modi believes that working with NPCI is unlike working with any other organisation because of the sheer impact it has on the lives of people. “NPCI is building solutions for a billion-plus people unlike any private player. It has a direct impact on the country. Through them, we get to serve the nation,” he says.

The demonetisation exercise of November 2016 gave NPCI a big boost as more and more people began to opt for digital transactions. Over 60 banks across India are now UPI-enrolled, and in September 2017, transaction volumes through UPI stood at 30.8 million, a 100-fold jump from 0.3 million in November 2016.

NPCI continues to move into newer directions. It is working to develop a standard QR code specification for Person to Merchant mobile payments. Users can scan these QR codes through their mobile banking apps and pay using their card-linked accounts.

But NPCI still faces challenges. Asbe says there remains a need to enhance the acceptance infrastructure. “There are only about 3 million PoS terminals to serve close to 900 million debit card customers. With an increase in the number of mobile phones, improved data connectivity and asset-light payment infrastructure models like QR codes, there is scope to fill the gap,” he says.

And then the challenge is to create an ecosystem where all stakeholders are aware of the benefits of digitisation. “The biggest challenge lies in consumer awareness and literacy on digital payments. When it comes to changing the payment landscape in the country, we need constant support from banks, the regulator, the Government and, most importantly, from consumers,” says Asbe.

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Q&A with Dilip Asbe

‘Changemakers are lifelong learners’

How difficult is it to bring about a change?

Old habits are hard to break and new habits are hard to form. If people are made aware of the benefits of change, then the transition becomes easier.

What are the attributes a changemaker should have to become successful?

Changemakers are lifelong learners who are willing to push themselves out of their comfort zones. A successful changemaker is one who is willing to fail in order to eventually succeed.

Does India, as a society, encourage changemakers?

With each passing year India is achieving new milestones of progress because of changemakers. About a decade ago no one had imagined that using an email-like address one could send or receive money. But today that is a reality.

What is the biggest change you wish to see?

We are working towards reducing the dependence on cash so that India becomes a less-cash society. We want more and more people to transact digitally because there is a cost attached to printing currency.

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