India has a diverse and a complex bill market structure, estimated at $160 billion, according to RBI, as households pay, on an average, 50-55 bills a year. Among the electronic payments infrastructure, ECS occupies a 50% share followed by cards. What kind of a market are you looking at
Large billers like utilities are not a core segment for PayUPaisa. The proposition of PayUPaisa for a buyer is safety of money and data. It will, therefore, evolve as a payment method where the users will prefer to pay through it while continuing to use their card/bank account.
However, since paying to billers is considered extremely safe, we expect moderate adoption. However, for very small billers like a resident welfare association, which charges a monthly maintenance fee, or schools that charges fees (it is a recurring payment and can qualify as bill payment), for them, we see extensive adoption. These small billers are not online today and PayUPaisa allows them to go online within minutes, without upfront cost, without the need of having their own website and without documentation, allowing the member to easily pay the fees to them.
How does PayUPaisa fit into the RBIs payment system vision document for 2012-15
The core component of RBI's payment system vision is a less-cash society. RBI wants more electronic payments and that is exactly the core vision of PayUPaisa, too. In the country today, less than 10,000 sellers accept online payments. We aim to increase this number to a million in the next three years by enabling SMEs, hotels, schools, colleges, freelancers, societies, etc., to collect payments online. PayUPaisa provides them with tools to create their own websites and webstores with an embedded payment gateway for free, allowing them to be live within minutes.
On the other hand, in India, today, there are less than 20 million buyers who pay online; and out of this, only 7 million are active buyers who pay online for a non-travel product. PayUPaisa intends to increase this number to at least 20 million in the next three years by promising safety of money and data to the buyers so that they can transact without fear. As more sellers and buyers come online, automatically the transaction shifts from cash to electronic.
Globally, a lot of efforts are under way to move towards electronic trade finance and electronic invoicing. Electronic letters of credit are important components of this measure. How do you see the concept panning out in India and how are you developing the technology
I will answer this question from a micro and small enterprise perspective operating in the B2C space. It is very hard today for a medium and small enterprise to get credit because it is difficult for them to establish high credit worthiness. As these enterprises adopt PayUPaisa and their transaction history get created on that system, many lenders both banks and non-banking financial companies will be interested in lending to this community as the transaction history will act as a substitute/indicator of credit worthiness of that enterprise.
By lending, I am referring to primarily working capital or short-term loans. This system will work most effectively, if it uses electronic invoicing and electronic letter of credit. We are at least a year away from doing something like this and are, therefore, not actively working on developing that system.
How would you build consumer trust in online payments when people do not have any confidence even in banks for online payments
Trust is built by only delivering on the promises. If we promise safety of money and data to a buyer, we have to continuously deliver on that without fail. Doing that is extremely expensive unless one can use technology to bring that cost down.
A bank, typically, does not work on cutting-edge technology, but adopts mainstream technologies. We, on the other hand, work on cutting-edge technologies to detect risk in our system better and bring efficiency in our process to keep the overall cost of delivering the promise to the customer low.
For example, we use device fingerprinting technology to uniquely identify a device in real time. This identification is independent of cookies, internet protocol and browsers. Similarly, we score a seller by checking its reputation online, which is done by continuous crawling of the web and its results being fed into a self-learning algorithm.
How secure would be consumer credit card data at your end Do you have programme where the card details, especially the CVD number, is deleted the moment the transaction is done
Yes, and more. We delete the CVV/CVD number after posting the transaction to the bank for processing. If the user permits, we can store his card number and expiry for future transactions. The key to protecting this data is encryption and storage. We used expensive switches (or hardware) to encrypt this data and store. By using specific hardware, it becomes much tougher to hack into such a system. We take protection of consumers data very seriously.