Welcome and Opening Addresses
Overview and Objectives
Introduction to the sessions and the objectives of Digital Payments South Asia
Abhijit Sengupta, Country Director, APSCA India
The Future of Digital Payments in Asia
What are the factors that have enabled China to become the world leader in mobile payments with over 520 million users of mobile QR code payments by the end of 2017? How was this achieved in timeframe of just over 2 years, without mobile payments fragmentation? Was it driven by online payments or face-to-face payments? How has almost ubiquitous mobile payments acceptance been achieved? What has been the reaction from banks and the impact on the card payments business in China? Most importantly, are these outcomes achievable in other markets in Asia-Pacific, in India and in other global regions?
Greg Pote, Chairman, APSCA
On the Road to Interoperability
Mobile wallets in India have experienced exploding usage during demonetisation, plateauing after cash was reintroduced, a slowdown in transactions after mandatory KYC requirements, and a new upsurge since May this year. Upcoming regulatory guidelines are expected to first enable interoperability between KYC-compliant prepaid payment instruments (PPIs) including mobile wallets, and later interoperability between PPIs and banks. This session explores how these changes will impact development of mobile wallets in India’s retail payments business.
Viewpoint 1: Nikhil Sawaitul, Associate Director II, Payments & Fintech Partnerships, IDFC Bank [~20min]
Viewpoint 2: Speaker to be advised [~20min]
Discussions: Rethinking custom authentication and the concept of KYC
The original concept of Aadhaar was not that the customer’s Aadhaar number and Aadhaar-related data should be stored by third parties (a practice which goes against the global trend of data privacy, such as GDPR). The original concept of Aadhaar authentication was that it would be done only by sending the customer’s Aadhaar number, the customer’s encrypted data from biometrics (given at time of authentication) and the customer’s name to UIDAI for verification of the customers identity. The UIDAI responds to verification requests by replying either ‘Yes’ or ‘No’ - and that is all that banks, payment banks, mobile wallets and any other third parties can expect in future. The SC ruling will not allow commercial entities to store the customer’s Aadhaar number or any related data. They can only store data that the customer provides to open the account, together with a record that Aadhaar KYC has been carried out at the time of opening the account. Will this be sufficient for banks, payment banks and mobile wallets to meet the KYC requirements specified by the regulator? Just as importantly, will it enable the smooth operation of the Unified Payments Interface (UPI)?
UPI - paying as fast as messaging
Unified Payments Interface (UPI) transactions increased from 2M in December 2016 to over 246M in June 2018, while the total monthly transaction amount increased nearly 60 times from Rs 700 crore to over Rs 40,000 crore (over USD5.5Bn) in the same period. An over-arching set of payment rails based on mobile-based real-time payments and providing ubiquitous interoperability between every payment system in India is proving to be a powerful proposition for driving digital payments. This session explores the many new opportunities enabled by UPI.
Viewpoint 1: Bertram D’souza, Vice President & Head - Digital Payments, Kotak Mahindra Bank [~20min]
Viewpoint 2: Mihir Gandhi, Partner, Leader - Payments Transformation, PwC India [~20min]
Viewpoint 3: Mehul Mistry, Senior Director, Payments & Fintech Partnerships, IDFC Bank [~20min]
Discussions: Real-time payments, mobile wallets and card-based payments, KYC
India's digital payments market is estimated to increase from about $200 billion today to $1 trillion by 2023. Will that growth be driven by real-time payments, mobile wallets or card-based payments? UPI transactions are growing at a phenomenal rate but are they undermining the original objective of payments banks and mobile wallets? Most UPI transactions today are P2P - is this accurate or are many UPI transactions P2M or P2G? What strategies could assist the development of UPI transactions in the retail sector? If the number of UPI P2M transactions could be significantly increased, then will this grow the total volume of digital payments transactions? Or would growth in the number of retail UPI transactions compete with or even cannibalise card-based payments and mobile wallet payments in India?
How will the Supreme Court decision regarding Section 57 of the Aadhaar Act, impact the Aadhaar-based authentication processes (based on the Aadhaar-related data collected by payments services providers [PSPs] from their customers) which enable the smooth operation of the Unified Payments Interface (UPI)? How will NPCI and all their connected PSPs be able to leverage the existing Aadhaar infrastructure if they are not allowed to hold or manage Aadhaar-related customer data? If customers voluntarily agreed to provide their Aadhaar-related customer data to banks and non-banks then will this avoid conflicting with the Supreme Court decision?
Bringing the underbanked into the payments business
Aadhaar has registered almost 90% of the population (1.2 Bn people). Using the program to provide access to payments services is proving to be transformative. Aadhaar-based payment solutions are designed to be easy-to-use and reduce the costs of providing financial services to the underbanked. The Aadhaar enabled payment system (AEPS), Aadhaar Pay App and Aadhaar Payment Bridge are driving simple and low-cost financial inclusion. But the future of payments banks as a channel to bring formal financial services to the underbanked appears less certain.
Discussions: Outlook for payments banks
Payments Banks were intended to introduce un-banked/under-banked citizens to the first tier of financial services. In a business segment with challenging profitability (no revenue stream from lending), recent government requirements for more stringent KYC have limited growth. The Jan-Dhan Yojana financial inclusion initiative provided almost every Indian household with access to a bank account, removing the unbanked market which was the original objective of payments banks. Then the Unified Payments Interface (UPI) enabled digital technology companies and full-scale banks to compete with the payments banks. They may soon face more competition from interoperable mobile wallets. A lot has now changed since the concept of payment banks was first proposed in 2013-2014. Does the payments industry believe there is still a market for payments banks and their entry-level financial services?
In this session, all conference delegates will have the opportunity to participate in 1 of 3 roundtable discussions lasting 20min each, chosen from the list of roundtables below. Each roundtable discussion will be assisted by experts who will facilitate, but not lead each roundtable. The objective is to provide an informal opportunity for all delegates to join discussions and get their questions answered.
1 - Accelerating Mobile Wallet Adoption and Usage
Average mobile wallet transactions are low compared to other e-payment modes such as cards. How can mobile wallet companies entice their customers to spend more - but without the cost of cashbacks offers and discounts?
2 - The Business Model for Consumer Payments in India
The payments industry supports the objective to expand e-payments acceptance and usage but with MDR capped for all card payments and low or zero fees for real-time payments, where is the retail payments business model in India?
3 - The Commercial Proposition for Financial Inclusion
Commercial opportunities usually drive innovation and create results. Can we create improved outcomes for financial inclusion by aligning our commercial interests with long-term well-being of people who most need financial services?
Close of day one