How has Covid-19 affected digital payment industry: in conversation with Suhail Sameer, BharatPe
Suhail Sameer, Group President of BharatPe, shares how the last few months been for digital payments
It seems to be another era when cash used to be the medium of all our transactions. The payments industry has evolved, and so have the consumers. From swiping our debit and credit cards at the point of sale to depending on mobile wallets & UPI for our day-to-day transactions, we have gone cashless- quite literally.
Q. How much has the tech industry evolved in India in the last decade?
The technology industry has undergone an overhaul of sorts since the last decade. There has been a sea of change- whether it is about the emergence of cloud as the backbone technology or the rise of advanced technologies like artificial intelligence and machine learning.
The financial services space has seen a huge shift with the launch of numerous mobile wallets, the launch and rise of UPI and the increased acceptance of digital payment modes.
Q. According to a report published in August last year, digital payment in India is witnessing thriving growth with a CAGR of 12.7 percent in the number of non-cash transactions. What has been the primary reason behind this boom in the digital payment sector?
Demonetization in November 2016 was a historic event that set the stage for digital payments in the country. It gave the much-needed impetus to the use of digital payment modes like mobile wallets, UPI/QR code-based payments as well as internet banking.
This year, the Covid19 pandemic has further fuelled the use of digital payment modes. While pandemic made it difficult for many industries to stay afloat, it actually worked to further drive digital payments penetration. We did see an initial dip in payments in April-May, but the same has picked up well and we are seeing much better acceptance for digital payment modes across the country.
The regulatory landscape is also encouraging the use of online payments for financial services. With an appetite for technology growing even in poorer sections of society, I believe that the time is right for the fintech companies to seize this opportunity.
Q. What were the trends that dominated the digital payment industry in the last decade?
Digital payments were limited to selective use of internet banking across urban areas for the first half of the last decade. Mobile wallets were in existence but the transactions were limited primarily to recharges and bill payments. The acceptance for digital payments was slow and very selective in nature. P2P payments were also largely limited to internet banking for many years.
The scenario totally changed post demonetization in November 2016. Initially, it was purely out of compulsion that millions moved to digital payments. However, slowly they realized that this is a more convenient mode of payment acceptance. The country has moved to IMPS, mobile wallets and now QR based payments, from internet banking. From P2P payments to making payments at merchant outlets, digital payment is now an acceptable norm.
Also, the rise of smartphones and the increase in penetration of the internet beyond the tier-1 cities has fuelled the adoption of digital payments in tier-2/3 towns and cities. Backed by Government of India’s initiatives, financial inclusion is being led by fintech companies in the country.
Interestingly, India is doing extremely well in digital payments, from a global standpoint. UPI has been a game-changer for digital payments. It is a proud moment for us to see UPI going global.
Q. Do you believe that to a certain extent, some sections of people in India are still not able to completely place their trust in digital payments. If so, what can be some major reasons for this?
I believe that while we have made considerable progress with regards to the adoption of digital payments, the adoption is low beyond tier 1 cities. The reasons for this are aplenty.
First and foremost, digital payment is a relatively new concept and a large number of people are wary of trusting these channels. They fear losses due to cyber-attacks or frauds.
Secondly, the awareness and understanding of digital payments is still limited. Some of them still don’t know solutions like UPI are free. They also do not know of the convenience it has to offer.
Thirdly, a sizeable part of the population does not have access to banking and hence, are unable to explore digital payments.
Q. A lot has changed in the last 6 months due to Covid-19 and the lockdown. How has it affected the digital payment industry in India?
Covid19 has been tragic, though has provided the much-needed impetus to the digital payments industry in India. We are one of the industries that has actually emerged stronger from the pandemic as we witnessed customers shying away from cash and adopting digital payments as their preferred mode. There has been a colossal rise in use of digital payments for everything, from groceries to utility bill payments, across a demographically diverse set of people.
According to a recent study by the Capgemini Research Institute, 3/4th of Indian consumers have already stated increased use of digital payments since the virus outbreak. Also, the study states that 74% of Indian consumers are expected to continue increasing the use of digital payments through the rest of the year.
Q. What kind of new trends are expected to dominate the Indian digital payment industry this decade, especially after COVID-19?
I believe that the new-age fintech companies will lead the way as digital payments become the preferred payment mode across the country. UPI has emerged as the largest beneficiary in these times and will continue with its growth story. The other modes that will see an uptake include tap-and-go contactless payments as well as digital wallets.
Online commerce and payments will see a huge increase, across industries as people are still wary of venturing out. I also believe that fintech lending across consumer as well as SME segments will see a huge spike in the coming times.
Q. What are the major challenges faced by the digital payment industry in India currently?
One of the biggest challenges faced by the digital payment industry is the lack of awareness of the convenience and the low cost of digital payments. There is a need to run programs to create awareness about the convenience and simplicity of use of these payment methods.
Another risk is that of cybersecurity. There are a large set of customers who do not use digital payments because of the fear of frauds. Fintech companies are focussing heavily and investing in technology to ensure security and safety of digital payment transactions.
Q. Tell us about the inception idea of BharatPe!
BharatPe was launched with the vision to become the merchant’s preferred partner for all payments and lending requirements. We want to be the trusted partner of 50 million SMEs in India.
We believe that SMEs are the engines of growth of the Indian economy and BharatPe is committed to empower their business with simple, convenient, yet powerful fintech products.
Q. What are BharatPe’s plans in India for the next 2-3 years?
BharatPe is committed to becoming India’s largest merchant platform. We want to become the preferred partner for merchants for all their financial needs. We intend to offer products and solutions that enable the growth of over 50 million SMEs in India.
Today, we have a range of products including interoperable UPI QR, lending products for merchants as well as a POS for payment acceptance across multiple payment modes. In the next 2-3 years, BharatPe will be rolling out products in line with our overall vision as we emerge as the ‘partner of choice’ for millions of merchants.
Q. With the Government's emphasis on Aatm Nirbhar Bharat, how does the future of Indian startup ecosystem look like in the next 5 years?
I believe we are laying the foundation of a new India that will be driven by new-age Indian startups. India has emerged as a startup hub, over the last few years.
Today, startups are no longer limited to tier-1 towns and cities, but are now a common sight even in smaller towns and cities. Entrepreneurs have become an integral part of our economy and I foresee them playing an important role across verticals, including the unconventional ones like space technology and renewable energy.
Q. To every aspiring entrepreneur, what would you like to advise them?
Believe in yourself, follow your dreams and do not get bogged down by roadblocks. Perseverance is a key to success. And hire people who have the same drive as you, and hopefully are better than yourself in capabilities. And once you do hire them, give them the independence to unleash their best.
Ideas are easy, Implementation is Hard, learn from the ones who knows how to start. A Publication by Tealfeed.