Arif Khan, Chief Digital Officer at National Payments Corporation of India (NPCI), spoke with Samee Zafar (Director, London). In the interview, Mr Khan outlines how India is moving towards digital payments and how NPCI and its latest initiatives are contributing to this movement.
1. How fast is India moving towards digital payments?
The pandemic has increased the momentum of digitization supported by the regulatory framework and policies of the government. Digital onboarding has risen substantially, with more people exhibiting a behavioural shift towards digital means of payment. The last 12 months have seen a growth in digital payments that, under normal circumstances, would have happened over the next 3-5 years. As per the Reserve Bank of India’s (RBI) Annual Report 2020-21, the payment systems recorded a robust growth of 26.2% in volume on top of the expansion of 44.2% in the previous year. Overall, the digital transaction volume in 2020-21 stood at 4,371 crores compared to 3,412 crores in 2019-20, attesting the resilience of the digital payment system in the face of the pandemic. The nation is also witnessing the growing confidence among consumers towards digital payments not only in tier I and II cities but also in tier III and beyond. India was home to the highest number of real-time online transactions in 2020, ahead of countries such as China and the US. 25.5 billion real-time payment transactions were processed in India, followed by 15.7 billion in China, 6 billion in South Korea, 5.2 billion in Thailand, and 2.8 billion in the UK. The transaction volume share for instant payments in India, among real-time transactions, was 15.6%, whereas 22.9% for other electronic payments in 2020. As per the ACI worldwide report, Digital Payments in India will grow to 71.7% of all payment transactions by 2025.NPCI along with the RBI, the Government of India, and ecosystem partners have been working towards a common goal of achieving a less-cash, more digital, financially inclusive society in India. A recent study conducted by NPCI and PRICE revealed that 36% of households surveyed used digital payments for the first time during the lockdown. The enhanced value proposition of convenience and user experience has made digital payments popular among the masses. Modern fintech players have also stepped up to empower customers with seamless, hassle-free, and contactless payment mechanisms. Moreover, the Central Government is constantly encouraging consumers to adopt digital payments. All these factors, when combined, indicate that the future of payments is heading towards digital and slowly but steadily inching towards making it a necessity. Thereby accelerating India to rise as a digital-first economy in the post COVID era.
2. How is NPCI contributing to this digital shift?
NPCI has been at the forefront of the digital revolution in the country. It is striving to encourage both customers and merchants to adopt digital payments amid this pandemic with multiple awareness campaigns. At the same time, NPCI is working with payment partners to provide innovative solutions to meet market needs. The product portfolio of NPCI contributes to around 70-75% of the digital payment volumes of India, with UPI leading the race by contributing 54%. With over 224 banks accepting and remitting UPI transactions, merchants of all scales have now onboarded into the UPI platform. UPI has been registering 2 billion monthly transactions for the last 8 months. It is increasingly gaining momentum among customers owing to convenience, safety, and instantaneous factors. The first of its kind, UPI AutoPay, functionality that took off last year is also expanding rapidly, with both merchants and customers adopting it. The recently launched UPI prepaid vouchers are being used to facilitate the distribution of vaccines to the people at large. India’s home-grown card network developed by NPCI – RuPay has played a significant part in the evolution of card payments. A lot of innovative features have been introduced in RuPay contactless cards in the past few months. The acceptance of RuPay in the e-commerce space is supported by 884 issuer banks. The NETC FASTag which is designed to provide a hassle-free toll payments experience to vehicle owners is now live on 850 toll plazas in the country. In terms of ensuring seamless recurring payments for customers, Bharat BillPay has now onboarded over 20,000 billers across categories. NPCI is also set to internationalizing UPI and RuPay by taking them to newer foreign markets with the launch of NIPL (NPCI international Payments Limited) last year. Additionally, NPCI has been supporting and nurturing fintech start-ups by conducting accelerator programmes like Hackathons, Ideathon, and Grand challenge to bring out the creative minds and innovation in them.
3. What do you do in your spare time?
I like to dedicate my spare time to my family. I believe young kids need their share of attention and it is always fun to learn from them as well. It is great to see that my boys have started taking interest in football, so it is like a family reunion while watching football games. The joy of watching the game increases with Man City winning the league, it’s like icing on the cake. I also love to read some interesting books on leadership in the new world.
4. What are you reading at the moment? What is your favourite movie?
The Leadership Literacies by Bon Johansen is an interesting read. I have always enjoyed watching sci-fi movies. Quite frankly, it is not a bad way to comprehend what the future beholds. They have been telling us about AI, humanoids, Mars, and electric cars way in advance. In the current genre of movies, I quite enjoy the Avenger series. It is something I have in common with my kids and allows me to spend time with them. Also, time and space subjects have always interested me. I keep saying that the Cash is just like Thanos and all the players/avengers have to assemble to beat this enemy.
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