BENGALURU: The Reserve Bank of India’s recent announcement of a discussion paper on allowing more players in digital payments business has enthused non-banking payment companies, which are planning to reach out to the RBI with their suggestions on how the objective can be best achieved.
The Payments Council of India (PCI), an industry body representing all-digital payment companies in the country, is looking at this as an opportunity to rally support from its members, bring in inputs from industry players and reach out to the central bank with its own set of suggestions.
“There is a handful of banks who are dominating the payments scene in India with more than 90% market share. There is a need for more banks and non-banks to play a bigger role since the country has only 12% of its transactions digitized at present,” said PCI chairman Naveen Surya. “We will surely reach out to our members, include as many inputs as possible and take it to the Reserve Bank so that the country’s digital payments agenda can be fulfilled.”
As per latest data shared by the RBI, only 14% of digital transactions in the country happen outside the banking ecosystem through prepaid payment instruments or PPIs. In terms of value, banks have almost 99% share owing to the high-value payments happening exclusively through them.
Further, in the non-banking segment, only a couple of players have the lion’s share of transactions.
“The major chunk of digitization is happening for people who were already using cards or other basic banking services. To reach out to the set of people who are still dependent on cash, we need more innovation,” he said.
Coming out with his own set of suggestions, Bipin Preet Singh, chief executive of MobiKwik said that an open API (application programming interface) driven access along with checks and balances is required to foster more innovation in payments. Highlighting a few use cases, Singh said Bharat Bill Payments and Unified Payments Interface have enabled non-banks to partner with banks and bring about innovation in payments but more can be done.
“An initiative like BharatQR is heavily dependent on banks, but I believe non-banks could play a very important role in taking it to merchants and promote offline digital payments,” said Singh. While this could be a huge opportunity for existing payment players, the central bank could also be coming from a pure de-risking perspective where a few global players are dominating volumes in digital payments.
“Players such as Google and WhatsApp are entering the Indian payments scene with a strategy that is adjacent to their core businesses. If sometimes the two visions do not match, they might look for an exit. Hence the need for more players who can operate at a pan-India scale,” said Vivek Belgavi, fintech leader at PwC. “This could also be an opening for players with scale-like FMCG companies and telcos who could start playing a bigger role and use UPI as their base solution.”
While RBI’s perspective will be known only on September 30, entrepreneurs can lap up this opportunity and grab maximum share of incremental growth in digital payments in the country. For more such news stay tuned with inventiva.co.in.Featured Image Credits:IndianMoney.com.