In a cash-heavy economy like India’s, products that spur consumers to make digital transactions are always to be welcomed provided, of course, they’re not endangering the payments system. The launch of Google Tez in September last year, for instance, clearly triggered an inflexion point of sorts for the Unified Payment Interface (UPI) app; post the launch, UPI transactions have gone up eightfold to 150 million transactions. Paytm, which launched its UPI-based app last November, also created a similar effect as digital volumes surged; today, Paytm boasts more transactions a month than even State Bank of India. Indeed, while the pace of digital transactions was picking up, the launch of UPI apps by a Google and a Paytm has altogether altered the trajectory. So it’s no surprise really that more global tech giants are also making a play. WhatsApp is currently testing out a Beta version of the BHIM UPI, within a limited universe and only for P2P payments, and Amazon is testing out Amazon Pay.
This is exactly what the National Payments Corporation of India (NPCI), and the government, would want, a transitioning to a digital ecosystem. Even banks have launched wallets and their own UPI apps, realising they must keep up with Fintech players if they are to retain their customers. It is, therefore, somewhat surprising that Vijay Shekhar Sharma, founder of Paytm, who has done so much to popularise digital payments, should be complaining about WhatsApp’s UPI product, alleging the lack of a level playing field. For some reason Sharma is peeved and claims the regulators are being lenient with WhatsApp’s UPI app. Sharma should know the Reserve Bank of India (RBI) would never allow a Google or a WhatsApp to get away with fewer authentification factors than it would a Paytm. Moreover, the banks would certainly want to make sure there are no systemic risks in allowing money transfers across the apps. If an ICICI Bank is partnering with WhatsApp therefore, it would surely take care to see the bank and its customers are fully protected.
Sharma should face the competition—which is good for the consumer—and realise that no regulator will risk a systemic failure. Any rules relating to safeguards for customers and cybersecurity will be the same for all. If consumers end up making more payments via WhatsApp, it will be because the app is very popular and the process is simple. Much like in China, where digital payments became popular through the integration of payments apps into the e-commerce and social platforms which now command a 95% share, India too could see a similar trend unfolding. It would be futile to fight this because it is probably the easiest way for consumers to transition to a digital ecosystem. Whether or not WhatsApp is permitted to restrict money transfers from its UPI handle to only other WhatsApp users remains to be seen; this would imply its app is not inter-operable. However, customers may demand the app be made inter-operable and WhatsApp may be compelled to tweak the app. The total digital payments market is estimated to grow to $1 trillion in the next five years, according to Credit Suisse, from around $200 billion currently. But this will not happen unless the systems are totally secure and no regulator will risk a failure.
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