Notwithstanding the entry of MNC players in the payments space, a bank like Axis Bank that powers the system will continue to flourish, Rajiv Anand, executive director (retail banking), tells Shritama Bose. Excerpts:
FY17 was important for digital payments. First we had the launch of the Unified Payments Interface (UPI) and then demonetisation happened. Did any of that impact your digital banking operations?
Our digital journey started more than a decade ago with internet banking. Our mobile app, which we have had for five-odd years, has gone through multiple avatars. We were among the early adopters of UPI as well, launching one of the first apps in August, 2016. Payments are core to our franchise. Customers open a savings account once or twice with us, take a home loan once or twice. But payments is what they do with us daily and we provide them the whole gamut of payment capabilities.
There are two types of payments – P2P (peer to peer) and P2M (peer to merchant). On the merchants’ side, we are among the largest acquirers in the country, also being market leaders on the UPI front. For example, we’ve powered Samsung Pay, Google Tez, Uber, Indian Railways Catering and Tourism Corporation (IRCTC), Life Insurance Corporation (LIC), ensuring that people can pay for these services through UPI. Ultimately, it’s about making the entire payment experience simple.
Demonetisation made the cash-heavy nature of the economy evident. To give you a perspective, if we had 100 debit card transactions at a point of sale (POS) terminal pre-demonetisation, the number went up to about 300 during demonetisation. It has since settled at about 200. So, there has been a permanent shift in terms of the way people transact. At the same time, a lot more is needed to move transactions from cash to digital. There has also been a big shift around UPI which has witnessed phenomenal growth over the last few months—a ten-fold increase in value terms over a one-year period. Even in the number of transactions, from the 5-6 million transactions per month the system saw in the pre-demonetisation era, we today have more than 150 million. So, both UPI and demonetisation have been drivers as far as a change in customer behaviour is concerned. And Axis has been well positioned to capture that shift.
The payments space in India has seen the entry of a few multinational players, posing a threat to non-bank players. How do you see the space shaping up in the months ahead?
As I mentioned, there are multiple payment options available to customers: debit cards, credit cards, mobile banking, UPI. UPI too is available on multiple platforms, BHIM being one of them, Axis Pay another and, now, some of these multinational entities. But remember that the multinational entities represent, in a sense, the front end, with the rest of the system being powered by a bank. It is our banking and payment capabilities taken together with their front-end operations that make transactions simpler. While P2P UPI payments have grown a lot, we haven’t seen as much traction in merchant payments. It’s early days. Like I said, we are in the process of acquiring some large merchants. A lot of small payments are P2M as well. The ecosystem for making UPI payments is in the process of being built and you will see much more progress over the next few months.
Is there scope for foraying into the small offline merchants space with UPI payments?
Through QR codes. I think that is a work in progress.
You say you enjoy the largest share of UPI payments. How many registered virtual payment addresses (VPAs) do you have at present?
We have 6.5 million VPAs across our applications — Axis Pay, Axis Mobile, Samsung Pay, Google Tez — as of January, 2018. And we have over 10 million registered users