Mr. Gaurav Raina
UPI 2.0 is certainly expected to help increase usage. It has recently been launched, so we will have to give it some time before we can see an increase in transactions. We do observe that the P2P segment continues to do well; however, the merchant numbers could certainly be better. To boost the payments ecosystem, perhaps the strategy should be to try and get 100m monthly users on UPI as quickly as we can. One will then witness significant network effects on the P2P side, and there will exist a sizeable number of users to boost uptake on the merchant side. There is a reasonable chance that we could reach 100m customers on UPI before 1st January 2020.
Mobile wallet companies have done an excellent job of educating customers on m-payments. However, interoperability is key. One will have to wait and see what guidelines for interoperability are proposed by the RBI, before one can comment further on the impact on UPI. In general, the greater the interoperability in the payments ecosystem, the better it is for innovation, and eventually for consumers.
In the early days, everyone thought that USSD was going to be the transmission channel that will take m-payments to large sections of society. In fact, the Mobile Payment Forum of India (MPFI), along with NPCI, had spent a lot of effort in developing a payment solution over USSD. From a user perspective, there could be many reasons why it did not gain popularity. First, it requires a certain level of literacy, which means comfort in reading all the menu options to entering all the information required for the transaction. Second, in terms of usability, users have to fill in all the details associated with any transaction every time. It might be an idea to promote USSD initially only for basic financial transactions like balance enquiries and mini-statements.
When one considers a feature phone, the transmission channels for financial transactions are SMS or USSD. To use either of these channels, the users needs a certain base level of literacy. We also need to consider the issuer of usability. All the details required for a financial transaction have to be entered by the user every time. This is cumbersome. Just because consumers are comfortable using a mobile phone for communication, it’s not clear that they would be comfortable using it to conduct financial transactions. One suggestion is that on a feature phone, at least initially, one should have only simple options for basic financial enquiries like a balance enquiry or a mini statement. This will get consumers used to the idea of using the mobile phone as a device to access financial information. To enhance usability, there should be standards for message formats that all banks should follow when their customers request for a balance enquiry, or a mini statement, via SMS or USSD. These standards can be used across all types of mobile phones.
On data, there are two issues. One aspect is the data related to the user, and the other is data about the payments ecosystem.
On data related to the user, the opportunity is to utilise this data to start offering customised solutions. Financial institutions will do well to harness the full potential of data science and artificial intelligence to usher in an era of customized financial solutions and services to Indian consumers.
There is the other issue of data that can help inform policy discourse. One way to proceed is the following: we first ask specific policy questions, and then work backwards on what data is required, and who one should get it from.
We constantly need to be innovating on both security and authentication.
For security, the judicious use of data science and machine learning can complement current solutions.
For authentication, we also need to cater for users who might find it difficult to use current modes of authentication to carry out a financial transaction. For example, people who are not literate, or those that are differently abled, or the elderly who may not be very comfortable with certain modes of technology. Examples of options are voice-based solutions, face-recognition, iris, and fingerprints. There are two aspects to these additional solutions: (i) the maturity of the underlying technologies for financial transactions, and (ii) the development of standards before they are used to conduct financial transactions.
As a first step, it would be great to see voice-based solutions being used to enter the transaction details, and then the user only needs to type in the MPIN (Mobile PIN).
We need to constantly think of increasing the user base, innovating on authentication and security, and enhancing usability while being cognizant of privacy. In India, we have developed a range of solutions for mobile-based financial transactions and payments. Kudos to the entire ecosystem, but we need m-payment solutions to be adopted more widely. To that end, among all the available m-payment options, if some solution is gaining traction, we should push it to build a critical mass of users. For example, the P2P segment on UPI is gaining momentum. Once we have a critical mass of say 100m monthly active users on UPI, it will create tremendous network effects on the P2P segment, and possibly also impact uptake on with merchants.
For users with feature phones, we should promote simple standardized solutions for transactions requesting for bank balance or a mini-statement, via SMS or USSD. This will help in getting a large segment of users comfortable with using the mobile phone as an instrument to conduct financial transactions.