The volume of digital payments in India increased by 33% year-on-year during the financial year (FY) 2021-22. According to the Ministry of Electronics and IT (MeitY), a total of 7,422 crore digital payment transactions were recorded during this period, up from 5,554 crore transactions seen in FY 2020-21. This is a significant increase.
These numbers are music to the ears of Dewang Neralla, who has always been in the thick of things and is passionate about digital payments. He has seen cycles of disruptions and existential crises. He founded Atom Technologies Ltd., an end-to-end payment service provider, which was one of the earliest movers in the fintech space way back in 2006.
Atom Technologies rebranded itself in March this year as NTT DATA Payment Services India Ltd. The company caters to more than 6 million plus merchants, with an annual transaction value and volume of INR 800 billion and 100 million, respectively.
As CEO of NTT DATA Payment Services India Ltd., Neralla spoke to DynamicCIO.com’s Ashwani Mishra on the drivers of digital payment adoption, the next set of innovations and trends in the space, and how the company is leaving no tack untried to capture market share in the payments landscape in India and globally. Edited excerpts of the conversation:
Q. The last two years have tested every business. Disruption reached our doors faster than expected. How have you managed to keep pace in these changing times?
It has been a difficult time for sectors across. However, if you look from the payment’s world, or any digital business, the last two years have been predominantly focused around digital transformation. Everything and anything moved towards becoming digital. In the last two years, we have seen payments catapulting. There was no push required. People moved to QR codes, link-based payments and online payments in a big way.
For example, schools and colleges have moved to link-based payments. Pre-COVID these payments were done via banks. From a digital payments’ perspective, if demonetization was the first catalyst, then 2020 was definitely a bigger catalyst in terms of driving a complete change in the behavior and the manner in which digital payments are perceived.
Q. Digital payments are now at the core of financial transactions, right from personal payments to commercial payments. What are some of the key trends that you have seen emerge ?
In the last two years, a lot of people had cash flow issues. For us, education and healthcare are a major focus. Again, taking an example of education, schools and colleges moved from collecting fees from a yearly basis or quarterly basis to a monthly basis. The velocity of payment transactions increased here. Instead of two or four transactions, we now have 12 transactions happening in a year.
The second has been the boom in India’s buy-now-pay-later (BNPL) industry. This too is about managing cash flows. The third trend is the shift towards link-based payments. And finally, the Unified Payments Interface (UPI) has moved and surged ahead as a payment channel of choice compared to using a debit or credit card. In a nutshell, we are seeing the payments cycle being sliced down. Look at the growth in the QR (Scan and Pay) based payment solution. It has grown by over 90 percent last year.
Q. UPI, beyond doubt has been one of the biggest disruptors in the digital payment space. What are some of the other innovations/offerings that will further push adoption of digital payments in the country?
The attempt here is to reduce the friction as much as possible. Ultimately when you look at digital payments, there are two sides to it. Earlier the whole issue was about cash versus digital payments, and the whole lot of convincing against going towards ‘why you should not use cash? Why do digital payments?’ Then the government came in and disrupted the market by saying that RuPay and UPIs are free of cost. This led to faster adoption. Also, the move by the Indian Finance Minister to provide a subsidy on transactions below Rs. 2,000 for UPI was well received. This is the first side.
The second side is to look at data security and make it as robust as possible. Over the last six months, there have been a lot of regulations that have entered the system in the form of tokenization and card file storage. Now these are all directed towards ensuring safe and secure transactions. The next level of innovation is going to occur in recurring payments, although you have UPI Auto Pay which is already in place now.
The next set of innovation is going to be on different channels. Right now, we are seeing payments evolving. I am sure in the next two to three years will see contactless payments picking up. Apple watches to mobile phones, they are all NFC enabled right now. So, the idea is how can we move to a contactless delivery. India is slightly at a different curve right now. Europe and Australia have moved towards contactless payments completely. India is yet to shift to contactless payments. We will see a lot more contactless cards being issued. There will be a lot of interoperability around payments.
Q. Will it be right to say that we are looking at India specific growth story being carved out in the digital payments space?
Absolutely, I think this is going to be very India specific story because unlike what has happened in the West, we have done something different out here. We will have a lot more homegrown kind of solutions which will appeal to a lot of people.
For example, we are working on a kiosk that will be placed in hospitals for payments. People can make a payment using the kiosk rather than wait and crowd at the billing counters. One can easily go down to this kiosk, tap or swipe their card, or maybe use the QR code and carry out the payment.
Q. How do you see retailers and brick-and-mortar companies looking at self-checkout to give customers a quicker and more frictionless checkout experience?
Self-checkout is fairly common in the West and in Japan and Australia. I am not sure how easy or difficult the adoption will be in India. Though some of the stores have tried out self-checkout.
Self-checkout is activated in the IKEA store in Worli, Mumbai. Lifestyle store had also done it earlier and I think there are stores too. Self-service will definitely happen over a period of time, and there will be new solutions around it.
Q. What does the rebranding mean for NTT DATA Payment Services India Ltd., both from a business perspective and in terms of competition with players like Google and Amazon in the payment space?
NTT Data is a part of the $112 billion NTT Group, that is headquartered in Tokyo, Japan. We will now be able to leverage NTT Data’s global reputation across all their businesses and impact their sales initiatives with the merchants. We will also have access to global financial networks of NTT group companies and their partners in each region. In many areas our strengths complement each other.
With respect to the competition, this rebranding changes the entire landscape. Earlier we were more inward focused. Now we will tap the entire globe, and continue to build up stronger business ties and relationships in India as well.
Q. From an enterprise scenario, you will need to get up to speed and deepen your understanding in these changing times to innovate for future growth. How are you looking to innovate and embrace new age technologies?
Our internal team is carrying out a lot of research and development around machine learning. We have moved our entire infrastructure on the cloud right now. It has helped us to move on a microservices architecture that helps us get unlimited scale.
We are also looking at Web 3.0 right now, although there are not too many changes happening on Web 3.0 enabling technologies for payments. But we have started to watch this space closely.
The next level of evolution will be to build in more intelligence. Bolstering our security is another key focus area. With payment transactions and channels increasing, there is an increase in frauds and cyber-attacks.