Internationalisation of UPI, RuPay Credit card, Programmable Money, Business Models & New Opportunities with Dilip Asbe MD & CEO NPCI

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Internationalisation of UPI, RuPay Credit card, Programmable Money, Business Models & New Opportunities with Dilip Asbe MD & CEO NPCI:

Dilip Asbe, MD & CEO of National Payments Corporation of India ( NPCI ) chats with Sanjay Swamy, Managing Partner Prime Venture Partners.

Mr. Dilip Asbe is the MD & CEO of National Payments Corporation of India (NPCI). Prior to this he was the Chief Operating Officer (COO) of NPCI. He has played a pivotal role in designing, building, operationalisation and management of large scale innovative payments processing platforms like Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), Immediate Payment Service (IMPS) and India’s home grown card network RuPay.

Read the complete transcript below

Sanjay Swamy 00:50

Hello, everybody. This is Sanjay Swamy here. Welcome again to a new episode of the Prime Venture Partners’ podcast, where we bring you interviews and stories with people from the startup ecosystem. Today, we have the privilege of having a very special guest, someone from the startup ecosystem who now runs one of the most important organizations in India, the National Payments Corporation of India. My guest today is the CEO of the NPCI, Dilip Asbe. Dilip, welcome to the show.

Dilip Asbe 01:25

Thanks, Sanjay.

Sanjay Swamy 01:26

So, Dilip, I’m sure a lot of people on the show use NPCI products across the board, whether it comes to UPI of course, as well as several other platforms from NPCI. It would be helpful if you could start perhaps a little bit by talking about NPCI and its charter and its origins. Of course, I think very few people also realize that you are a CTO of a startup and then you moved over to CTO of NPCI. And so it’d be great to also hear a little bit about your background as well.

Dilip Asbe 02:00

Sanjay, let me start the genesis of NPCI. And the genesis of NPCI starts… There were two thought processes when the discussion on having an umbrella institution for retail payments to be started. One reason was RBI was doing a lot of operational work on payment system and being a regulator they thought that the operational work has to be done by some independent, separate entity.

And the second thought process and at that time the China UnionPay was already formed, and if China can have its own card compared to facing up Visa and MasterCard, the thought process was why not India? We were neck to neck on looking up to China on most of the things, so why not in payment systems? So these were the two things why everybody started thinking that there needs to be NPCI. RBI created this entity and RBI asked the Indian Banking Association at that time to take a lead to start this organisation.

So, the top 10 banks in the country started this institution. Obviously, this is a not-for-profit organisation, what it means is it can make the profits, but it has to plough back the profits into the innovations, the data centre, the research, or those kind of things what we are doing, but obviously, not give any dividends back to the shareholder. When the NPCI was coming up and then finance minister had actually given the commitment to the parliament that this is going to be a public good. This is going to be a public utility and going to be important to further innovation in the retail payments organisation.

When the RBI started building this institution, RBI sent this to one of the core payments person, Mr. Hota, who used to lead the payment system to be CEO in charge. A lot of banks who are participating in NPCI equity, send a lot of people initially, and that’s how this whole institution started. I must say that when the NPCI started, I give a lot of credit back to the RBI.

RBI looked upon very one important thing that RBI while hiving off RBI’s own operated payments system, such as check truncation, the electronic clearing, as well as the national financial switch, the RBI looked into that. This institution is day zero onwards, self-sufficient. And RBI also did one more thing, RBI requested Narayana Murthy to be the first chairman of this institution. And I think that put up a very solid foundation for this organisation. And I actually, we kept on building over in that sense because he provided valuable guidance to the institution, and he’s like a gold standard on institution building.

He was very clear right in the beginning that NPCI has to be self-sufficient from day zero. You can’t go back and ask for money from anybody. You have to earn your money. You have to innovate. So a lot of things and a lot of value-add in the initial building blocks. And I think a lot of credit goes back to RBI to build this entity and the top 10 banks to selflessly put up money, put up resources to build up this entity. This is the starting point of NPCI.

Sanjay Swamy 05:20

Got it. So if you fast forward to today for the names that consumers would recognize beyond say UPI, what comes under the scope of platforms that NPCI develops and runs and the various networks and so on.

Dilip Asbe 05:40

So we operate check clearing system, but that is on behalf of the RBI. RBI still is owner of the payment system, the operating guidelines. And we are the operators. We also operate some of the other payment systems like the FASTag. Again, we operate that system, which is the electronic tooling system. We operate that on behalf of NHAI, and the ministry of road and transport. We operate IMPS, this is how the whole Genesis of UPI started, which is one of the first of its kind real-time payment systems in the world.

And we also do RuPay cards. RuPay cards is our flagship product. We started with a variety of different types of the cards. And I think very soon you will see a lot of action on RuPay because we are investing very heavily on RuPay credit cards to gain as much popularity as debit cards have.

These are some of the platforms that we run. We also run a direct benefit transfer platform on behalf of the government to transfer the subsidies. We work very closely with Aadhaar, I’m sure you’re aware. I still remember that both of us were together in 2010 in Bangalore where we did the first micro ATM transaction using Aadhaar. And all of us really did not think that this is going to be so vital for the wellbeing of our citizens, the payment systems, what we worked without that. And I think it has been a fantastic journey Sanjay, well, 13 years in fact, when we look back.

And I think NPCI has been very, very fortunate to set up as a public good because what happens is a lot of support we get from the ecosystem, whether it’s Mr. Nilekani, whether it’s government, whether it’s RBI, whether it’s the bankers, whether it’s FinTech, startups, founders, lot of people actually, I must say that they’re so keen that NPCI is successful. So we end up getting a lot of credit, but I think the ecosystem has contributed a lot and the ecosystem continues to contribute a lot in the success of the National Institute, like NPCI.

Sanjay Swamy 07:55

Terrific. So if we were to look at it, maybe we’ll come back to that in a second. So broadly you said the ATM networks, FASTag, check truncation, of course, IMPS and NEFT, all of these things, and then UPI, which is sort of built a lot on top of IMPS and so on. So tell us a little about your background. Because also most people think that when it is the government sort of based institution, typical one comes from the IAS cadre or something like that, but you have a very startup industry background. Or certainly a tech background, we’ll love to hear about your background if you could share with the audience.

Dilip Asbe 08:35

I’m a technology graduate. I did my engineering and joined working in the software area. And I was in the US for a couple of years. Obviously, I got bored, came back and I met Mr. Rooney Anthony. And he was starting Euronet services in early 2002. And they were looking for a tech person. So I said, why not? And we started Euronet. I was there for about eight years with him looking after the APAC region, the Middle East region for technology built out, especially for Euronet worldwide.

And also we were running a global development centre. So fairly deep into the tech payment system. You can say that, but prominently legacy tech in that sense. And then obviously, when the NPCI was starting, I saw the opportunity and I felt that my skill set would be important for this organisation from a technology standpoint. And obviously, NPCI was run by Mr. Hota then, and he was also kind enough to give me a job. And I started as a CTO of NPCI. So complete transition from the MNC culture to the very kind of a public entity. So, fairly unheard of in that sense.

Sanjay Swamy 09:55

Right. First of all, I think you could have had several opportunities in the private sector, in the startup ecosystem sector, especially payments has been such a big piece, but going and working there in a very pivotal role in defining the sort of technology to be in such open, scalable manner and a new age, it’s just something that we don’t normally expect to have out of such an organisation. And that has truly been transformative. And now tell us the journey and the transition from CTO to CEO. And what does that mean for you.

Dilip Asbe 10:35

When I was CTO, obviously, while technology was a prime job. And thanks to Mr. Hota, as well. And actually, this goes a little backwards. Working with Mr. Rooney Anthony. Sanjay, if you recollect, we met in 2005 and thanks to him, he used to involve me a lot in terms of meeting customers, meeting the important people in payment systems like RBI and the IBA. So he had actually helped me to get a lot of sense from the market standpoint. And in terms of building some early relationships in the market. And those were very, very helpful when I stepped into NPCI. And again, Mr. Hota gave, again, a lot of freedom to interact with the market, to design products, to take the ecosystem together, to while we design some of the things.

So I think working with these two legendary individuals helped me to have that customer-focus, customer interaction right from the beginning. So while I was a CTO supposed to be a fairly inward looking job, thanks to these two gentlemen. I already had a great market. Then personally, I felt the need to do some management courses. I looked at the London school of economics. Again, Mr Hota was very kind enough to let me go every quarter, two weeks to London to pursue this course. I completed the course in two years.

And I think the CTO, CEO was very similar because the NPCI has been an extremely market-facing, customer-focused institution. And then obviously, the CEO opportunity. But Sanjay, the way I look at this whole thing is we are a 1.2 billion population country, and there would be many better candidates, many good candidates can lead the rule for NPCI. I think I find myself very fortunate to get this opportunity and deliver at least reasonable expectations to the ecosystem, RBI and the government.

Sanjay Swamy 12:45

I think you’re being very humble here, Dilip. I think it has been nothing short of spectacular from the transition, certainly at the time you were CTO to over the last five years because it’s not like there was something that you were trying to emulate. You have created an organisation which has solved problems that have been solved very differently from what was done anywhere else in the world. To have real-time retail payments at a scale, which is also probably bigger than anything else in the rest of the world combined.

So amazing work, kudos to you and your team for having done that. It would be helpful if you could share some of the history of this, especially the UPI journey, which has just been, I don’t even think we could have scripted as it has ended up so far. If you can talk about the origins of it why it came about some of the big moments, like during the demonetization, with the launch of BHIM, for example. And then of course, during COVID how the scale up has happened and what have been some of the challenges and surprises that NPCI had to overcome that as technologists, we don’t see from the outside.

Dilip Asbe 14:05

So Sanjay, it all started. We had Nandan Nilekani heading the UIDAI at that particular time. And since 2009 itself NPCI was collaborating with UIDAI in a big way, especially with Mr. Nilekani said that he was very clear that the UIDAI, NPCI are very similar organisations. And fortunately we started together, exactly at the same time we started. So somewhere, it was destined that while Aadhaar could do its core job of authentication, KYC and those services, Mr. Nilekani had early days envisaged that Aadhaar would be a payment address, the payment instrument and payment authentication method for the payment ecosystem. So we kind of worked very closely with you UIDAI. And you remember those times when Rajesh Bansal was there, Viral was there, Pramod, Sanjay, Shrikant and yourself, and all of us work very closely.

And we built up this Aadhaar payments bridge, and as well as the Aadhaar enabled payment system, which has proven an extremely valuable asset for the country. So the reason why I’m explaining this is because NPCI and UIDAI started very innovative things which actually proved very valuable. And while this whole thing was stacking up, while we should have a lot of brainstorming conversations, my NPCI team, Mr.Nilekani, used to address our board a couple of times.

And a lot of conversations were happening. And while we were running a lot of other payment systems like IMPS, RuPay, we were all thinking that there are a lot of issues in IMPS. And let me tell you while IMPS is really, really successful, why it can’t be exponential innovation because there was no pull. IMPS needed a long address IFSC code, which was very difficult for a human to remember.

A lot of complications. So then when we started thinking about NPCI team, bankers are usually involved and this is how the whole UPI started. And whether it’s a interoperability of the payment system, unbundling of the account and the front-end service, UPI-ID, the person to merchant payments, which was not part of IMPS to be part of UPI from day zero. And thankfully, when Samir and Rahul were thinking of starting something, they looked at this, and I remember somewhere in Yes Bank in early 2016, drawing up how they can play a role and we were trying to explain them.

Similar conversations back with many other players, whether it’s banks, whether it’s other institutions, Paytm for that matter or Google. So a lot of people came together and I think that’s what created a very vibrant ecosystem, Sanjay. Obviously, initial challenges were very many because these kinds of APIs were very new to the ecosystem, so stabilising the tech stack and from our side to Bank side has been a long journey in that sense.

And when you look at the demonetization that happened and the government decided, the prime minister that time decided that let’s create an app, BHIM App. While obviously, the government should not be doing this app business or NPCI should not be doing this app business. I think the prime minister thought that this will give direction. This will give a signal to the ecosystem that if the government can build an app for the payment system, why can’t the others. And I think this kind of created a BHIM app launch because UPI had launched already.

The BHIM app launch actually, created a huge sensation back in the ecosystem and actually, galvanised the ecosystem to jump onto the UPI bandwagon, which was not really looked at as a national priority. But I think the BHIM app created national priority and the prime minister actually met a lot of people at that time and pushed the secretary. The entire bureaucracy was actually trying to influence the private system to participate. So many challenges, but I think an exciting journey, Sanjay, to start and see where we are. Obviously, this doesn’t happen by one person, one entity, one institution. It’s an ecosystem effort and the ecosystem actually comprises back with a lot of vibrancy and a lot of enthusiasm.

And I think the RBI and government did a lot of work to create that enthusiasm about UPI. And I think we are grateful to both of them to even think that this kind of payment system can actually change the way payments are being done, not only in the country, but even worldwide.

Sanjay Swamy 19:15

So having said that, over the years, and one of the nice things about UPI is actually whether it has been incremental stuff, the core architecture seems to have been something that we got right from the beginning. And some of these things actually, they should not change too much that’s why they’re successful. But yet the scale has been incredible. I remember recently on my Twitter I saw somebody retweeted the original photo that we had taken on the day of the launch of UPI in one of the hotels in Bengaluru.You, myself and a couple of other people, and this is when we were envisioning the first transaction was going to happen.

And today, less than five years later, we are doing several billion transactions a month. And you should certainly share the best numbers, the latest numbers, but along the way, it has grown sort of in orders of magnitude. How has the infrastructure of UPI had to sort of scale up because this is a scale that most startups actually will not see. Even at the highest of scales, we’ll see 5,000 orders a minute and feel like that’s spectacular. But you are seeing the TPS is like has grown exponentially and clearly, it’s just been working very smoothly to scale up very silently. So what has gone behind the scenes into your organisation to make sure that it’s always working.

Dilip Asbe 20:45

Sanjay, I think when we started this, I think they were two important points. I would like to highlight. One is working with some of the finest architects, like Pramod Verma, Mr. Nilekani Who have been advisors. We kind of chartered the full open source journey in a big way with the UPI and some of the other systems. So that has been really valuable because I can’t imagine, at this scale if we are using some of the licensed products, some of the closed loop architecture. Whatever price we are able to afford to provide it back to the ecosystem, obviously, this wouldn’t have been possible.

And also the scale. So I think this was one decision, which I think was amazing. And I think we graduated to this. I must say that we were not very friendly before with open source, but I think this journey actually got us better. And still, I can’t say that we are better, but we are still learning every day passing by. I think this open source, the open architecture has been fairly beneficial for NPCI.

The second important thing, Sanjay, our board has been very clear that whatever, NPCI must ensure that it does with highest efficiency. So the board has been very clear and a lot of times when you look at the last three, four years, we have done the restructuring of the organisation. We have done run, grow and transform, so that run, can actually run the UPI, grow can actually build the features, and transform can actually look at what comes up to two years, three years down the line. So some of the things we have done to deal with the challenges, obviously I can’t say that everything has been sorted out.

In fact, we are working on now to make UPI work in the active mode across sites. And we are hoping that in the next three, four months we will go live. Because I think the objective, what the board has laid out, the UIDAI has laid out that UPI must give the highest resiliency that any payment system can give. And obviously, the gold standard is never down, never goes down. So while IT systems keep giving the problem, you should figure out a way to recover. And a lot of work has been happening Sanjay, still, it’s happening on this. And I think the learning journey continues. That’s what I can say.

Sanjay Swamy 23:15

That’s fantastic. I have to say that as a payments industry person that has seen and tried to build these systems, I know there are times that people experience transactions not going through every now and then, but that is really because of the overload. It’s not that the system has gone down. So I think it’s really amazing to see how reliable it has become, where we all broadly just assume it’s there for us anymore. It is no longer a question of can this thing work? In fact, now the expectation is just that it’s a utility, it’s always there. And so it really kudos to all of you for having done that.

I’ll switch gears a little bit, but before I get there, what is the scale today? If you were to talk to a CTO of one of our startup is listening to this in the startup ecosystem, what are some of the numbers?

Dilip Asbe 24:10

We are very close to 10,000 TPS now, transactions per second. And obviously, Sanjay you are aware that when we actually were looking at the regular, the traditional payment systems operate on a request-response. One request, one response, standard processing while UPI actually, does eight such interactions. UPI is not a request-response system. It’s a platform with multiple interactions. We go back and resolve the address to the account. We actually go back and check the beneficiary bank it’s on. We do a lot of things.

And I think 8 API is a standard request-response APIs compared to the one request-response API of the traditional ATM or any other IMPS for that matter. So when you look at 10,000 TPS, transactions per second on this, is actually like 50, 70,000 TPS is what we are operating right now. Sanjay, when we looked at this load and while a number of times you mention a point that there are failures in UPI because what happens is number of times, even the overall ecosystem is not sized and the volumes are going with such a speed. It’s always a catch up game, back to the ecosystem to put up the infrastructure, to put up the investing to 3X infrastructure ahead of time.

But obviously, this can’t be a reason why UPI, now everybody knows that it’s entire ecosystem, sure to give a seamless experience back to the user, UPI can’t go down. Whether it’s a NPCI side system, whether it’s Bank side system, all of us might have to over invest back into the ecosystem infrastructure to ensure that the system is up and available back to the end consumer. So I think multiple of tens of thousand TPS is what is being processed right now.

Sanjay Swamy 26:05

That’s incredible. So switching gears from the tech side. And of course, I know there’s a lot of work that goes into the compliance there, the certification, the reconciliation of transactions and that entire backend. I’m sure that there is a large team. How big is the team working on UPI alone in NPCI?

Dilip Asbe 26:20

We have been very fortunate to get a committed team in UPI. In fact, the original guys who have built up UPI, you remember Satish and Anubhav, they’re fortunately back with us and still heading up, going fairly strong. And I think the team is fairly committed to look at the challenges because when you run such a high velocity system, high intensity system, there are multiple issues which keep coming. And obviously, the team has to be on the toes to deal with it. But I must say that I am so proud of the NPCI team that never lets down the ecosystem. The team is always available.

And I think we have been taught from the beginning that we are a service provider to this whole banking ecosystem. So as a service provider, we have to be ahead in the technology game. We have to be better than everybody else. So this all have been values which have been part of our team. And obviously, the challenges would continue. And that’s a journey. But let me tell you, Sanjay, there is never a dull moment in NPCI.

Sanjay Swamy 27:30

Actually. I was just thinking through the earlier part of this conversation, and you mentioned some of the other system then even coming back to, if I look at FASTag, if I look at other prepaid system, the BBPS network, of course, UPI and RuPay, which is now launching both prepaid and credit cards. And then you have, of course, NEFT and RTGS and all these things, all of us as consumers and as SMEs, we interact with all these systems. And I think it is just really quite fascinating to think about all these new things that have come about in the last six, eight years, which have gone from zero to pretty large scale. And your team is managing them parallely.

Let’s switch a little to business models. This whole topic of zero MDR has been much written about, much talked about. Certainly, it has been very, I would say, disruptive for companies in the sector that have had to figure out other ways of making money. And yet at the same time certainly, at least the belief is that it has eliminated any friction. And so digital payments have become mainstream now. How should one think about where the right steady state is and where do you think they’re going to end up here? Is this a long term thing to say, is there going to be some change here?

Dilip Asbe 29:00

The way I look at it, whether it’s UPI or a card payment system. As far as UPI is concerned, normally the P2P is free of cost to the customer. You can’t charge the customer otherwise this option in UPI would go for a six. And when you look at a high level, the P2M actually funds the entire UPI ecosystem, the P2M charges. Well, obviously, when you look at P2M, can we afford to have very high MDR to the merchant, obviously cannot because this is the payment system, which is used by the small merchants, the small kirana store, and where the trade margins itself are in the 2%, 3% range. So there is no way that it is going to be very high, what do you call the charge model.

But at the same time, I personally believe that a small MDR, a very reasonable MDR can be a very efficient revenue model to the entire ecosystem. Let me explain Sanjay why this is required. And when any startups, any FinTech ecosystem which is actually leveraging UPI in a big way. They need to invest back onto the acquiring infrastructure, whether it’s Paytm, PhonePe, or even for the banks like HDFC, ICICI, SBI,etc.

So you need the funds for the entities to go back and deploy the QR codes at the merchant to integrate back to the merchant payment systems, or even for the online side, Razorpay or BillDesk. Those kinds of aggregators. Today, that incentive is very much essential because that is what is going to drive the market expansion. Supply is concerned and in terms of having the ubiquitous merchant ecosystem available, that’s a painstaking job, Sanjay. You are fully aware of what it costs to get the merchant ecosystem active services, solving their problems, and building up support systems for the merchant. And because they don’t understand the payment system at that level. So they have queries, they have questions and you need feet on the street to support them.

Second is the networks like NPCI, UPI or maybe some of the other networks like visa, MasterCard. And the customers bank, in that sense to support all the customers to onboard onto digital platforms, to service them, to support the grievance redressal, dispute resolution, those kind of things, and their app providers, whether it’s banks or TPA like PhonePe, Google Pay, Paytm and others.

So to actually cater to the demand side, to get a lot of customers, already 250 million customers are working on UPI and we believe that actual potential is 500 million. So reasonable MDR actually, takes care of this whole complex ecosystem, the ecosystem and the technology service providers operating on them.

I think a reasonable MDR is required, but MDR has been made zero. But now that with a lot of effort have been put by the ecosystem to convince the government that this is very reasonable and this is required. And the government also kindly agreed. I would personally thank honorary FM and PM for agreeing to the ecosystem demand to provide some sort of a digital reimbursement in lieu of MDR. So I think it’s getting there Sanjay. I personally believe that we are standing up on an inflection point now, and I strongly believe that the moment we look at the future of digital payments, and I don’t think we are very far away from a billion a day from what our country deserves.

Sanjay Swamy 33:00

Amazing. So what are some of the new ideas that we are going to see, we’ve been talking about what’s come so far, but UPI started off with the combination of P2P and P2M and of course, we would love to see it being used also for B2B payments and perhaps other recurring payments, things like problems which are sort of a big challenge here in India. And we do have the capability of mandates and stuff like that have it rolled out, but certainly not necessarily mainstream yet. So what are you looking at over the next, say 24 months that consumers should be able to see and opportunities perhaps for startups to partner to bring to market?

Dilip Asbe 33:45

I feel Autopay is at the stage when we started UPI. Autopay is about 5 million mandates a month on UPI, but obviously, the technical declines are very high. It is in the stabilisation process now because it’s, again, a very unique architecture unlike any other payment system, and it’s fairly complex, digitally signed mandates stored by white parties together. And I think it’s a step towards programmable money in that sense. So I think mandates is something we are very bullish on Sanjay. Obviously, it might take some more time, six months to a year to technically fully stabilise and give as superior service as UPI transactions, what you see. But I strongly believe that there is a 10x potential. So a country like this can easily have a 50 million monthly mandates on a UPI.

That will kind of change the way the recurring payments and some of the low ticket payments are made. And today, our objective is to empower customers. Today, when you give a mandate, for example, any of the merchants you don’t understand how to cancel that mandate, but with UPI we have empowered the customer to give full access to the mandate. He can add, update, delete at any point of time unless obviously, he has taken a loan, you can’t cancel that mandate. But apart from that, Autopay, I think it’s going to be a game changer. And at the very initial stage I believe the 10x growth is possible.

RBI has released the low ticket guidelines, 200 and below. I think that is where NPCI will do some more work on seeing that, how can we promote NCMC. Now, we have launched, we embedded the NCMC inside the RuPay and have a single card. So how do we drive NCMC and low ticket volumes higher? That’s going to be a big focus from our side. It goes without saying that the credit continues to be a focus. We are a credit starved country. And now that we have built up such fantastic payment system growth. While the credit card could well serve the top 50 million. I think from 50 to 250, I think that some of the low ticket credit alternate mechanisms can be very, very powerful and can drive the consumption and growth in the economy in a big way.

So I think these are some of the areas Sanjay, we are working on while we continue to fiddle around with blockchain and some of the other side, but obviously very early days on those.

Sanjay Swamy 36:30

Got it. Also, recently, there was the eRupee. The prepaid vouchers on UPI that was launched specifically around, I guess, the vaccine use case, but it is really a generic platform. How do you see that potentially taking off over the next 12, 18 months?

Dilip Asbe 36:55

See, I think the eRupee… when the government launched DBT, the government gives the money back to the customer’s account. Now, the customer has a choice where to use that money. Today, eRupee takes it to the next level. What the government does is, the government gives you a voucher and says that you can only use this voucher for this purpose. So even the end use instead of giving a hard money, the cash into his account or money, his account, the eRupee actually, well controls the last mile usage as well.

So it’s like a person specific, purpose specific end-to-end DBT solution, but as you’re aware, Sanjay, we launched the direct benefit transfer program in 2012, in fact, early 2012. And by the time we started actually galvanising a lot of volumes, it took four, five years in that sense.

So eRupee is in that very early stage. It might take two, three years more to gain traction and attention. But I think it holds a lot of promise, Sanjay, because what it does, it delivers a digital token in that sense to the beneficiary. And that token is very purpose specific in that sense to use it at a specific level. And today, when you look at the whole decentralised finance, what is actually changing the game is the token and the smart contracts.

And actually, the eRupee actually, kind of emulates the token in a midway in that sense because it’s fully programmable, it gives you a lot of context while using it. It allows you to put condition, validations at the last mile, without them coming back to the central systems. So I think it’s a great technological advancement. Obviously, it might take some more time to gain traction and popularity, and we are okay Sanjay. I think we are patient enough. We have worked on many systems, which initial years were like high and dry, but ultimately if the payment system has a value and ecosystem adopts it. It takes time like every other thing. But we believe very strongly about eRupee, that it has great potential.

Sanjay Swamy 39:15

So one last question Dilip, when I travel overseas, I’m often envious to see Alipay and WePay accepted here, and Chinese tourists can go and scan the QR code. And in India, many of us forget the wallet at home. And we are still very comfortable with BHIM based or UPI based QR code. When do we see the opportunity for Indian tourists? Because we can take an Indian debit card and swipe it at the terminal, then it works fine. When will we start seeing the ability to go to Singapore or Dubai or London, and just pull out my phone, pay with my favourite UPI app and not have to worry about currency exchange and all these hidden things that the tourists should not have to worry about?

Dilip Asbe 40:05

See, we have started the journey we have now, our fully own subsidy NIPL, NPCI international because NPCI has a huge mandate, still have to complete. So the RBI, the board, everybody felt that there should be a separate vehicle, which is driving globalisation, and we have the new subsidy, which is actually engaging back to the many countries, engaging back to BIS, World Bank, IMF and other developmental institutions. So Sanjay, when you look at the international cross-border payments, one thing is very clear that it takes time because the countries have different priorities. And as we speak, not many countries have actually built up the real time payment rails. So I think out of 40, 60 countries where Indian tourists actually travels or Indian Diaspora is present, many of them do not have real time payment systems.

So I think the first thing they’re doing is building up their own local payment system so that they can actually connect back that real time payments system to UPI, to facilitate cross-border transfers, cross-border transactions, transfers, and those kinds of things. So I think we are poised at a very good point to look at the internationalisation of the UPI, which kind of solves many of the problems as you rightly said. Virtually, it converts every transaction as a dynamic currency conversion. It gives charges up front, it simplifies how the money is sent back to both sides.

But obviously, cross-border is a very complex thing. And the both side regulators have to be aligned because there will be some changes in the regulations to be made, unless the regulation changes are made, it’s going to work very similar tricky way, the way it’s working right now. The standard do not understand what’s happening. The receiver do not understand what’s happening, but there is an opportunity to solve, but obviously, a lot will depend on the collaboration of the regulators to make it very efficient, cross-border merchant payments. But I think the NPCI international is doing a great job. They have reached out to many countries. Singapore is live, Sanjay.

Now, the travel will start, and it may take some more time to get the QR code acceptance in Singapore and UAE, but many countries, we are starting, it’s a time consuming, long term goal, but we are patient enough to see that how it can we be helpful to those countries, to build the efficient rails with India, to build the efficient real-time platforms without depending on anybody else, because it’s very important and that’s what we keep talking to the country is that don’t depend on anybody, you’ll have to be self-sufficient as far as payment system is concerned, critical payment system is concerned.

And today India’s approach to support them is not to make them depend on India. India’s approach to make them self-sufficient. India’s approach is the public good approach of India works very well as a public good approach for the world. Prime Minister also spoke about it in one of the interviews that the world must leverage India’s public good as the public good for the world. So efforts are on, Sanjay, but it’s another three to five year journey.

Sanjay Swamy 43:30

So much exciting stuff is happening in payments here in India and I think they’re all really grateful for NPCI being an organisation that has really encouraged working both with incumbents, as well as the tech entrepreneurs and startups. I’d like you to leave one parting thought for entrepreneurs in terms of what you see as potential opportunities that they should be investing their time and energy in and appreciate you being on the show. Thank you so much.

Dilip Asbe 44:00

Thank you so much, Sanjay, and the way I look at it, I think the founders, startups bring in amazing energy and vibrancy back to the entire financial services ecosystem. And their rule is very, very important. Some of the great startups, some of the great founders we have worked with who have been very close to build the UPI success. So I think the one thing which startups and the FinTechs could look at is trying to look at a long-term game. Financial services is a fairly sensitive area. It’s a heavily regulated area, rightly so. So it’s very important to build a right governance, the right compliance and the right institutional model when you’re actually working on a financial services area.

So it’s very important to keep a long-term view in mind and take our actions because the financial services, the high trust is a core backbone of this whole industry. And the founders, while they’re very good on the technological side, they’re very good on the architectural side. But a number of times, they do not get the compliance, other things which are the information security, the privacy, and those kind of things very clearly. Because of various other issues, they push the problems to the next stage. So I think all the founders who really want to make a large brand or a large success in the financial services ecosystem much start thinking about this other pillars, which will help them to build a trust in a long term game, such as compliance, the fraud risk management, the consumer awareness, the information security and those kind of things.

Sanjay Swamy 46:00

Wonderful. Dilip, again, congratulations on an amazing decade at NPCI. I can’t believe i’m saying that it’s been over a decade for you, but I really think you put us in a position where the best is yet to come. I look forward to collaborating over the coming years and seeing some more amazing heights for NPCI. Thank you so much for being on our show.

Dilip Asbe 46:20

Thank you, Sanjay.

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