You don't know it but we're involved in each of your card swipes: Fiserv GM

In a Q&A, Rishi Chhabra, who also heads the firm's India and Sri Lanka operations, dwells on his company's swift response to RBI's six-month moratorium and data localisation rules

Nasdaq listed Fiserv Inc, a $16 billion enterprise by revenue, is one of the largest global financial services technology companies providing end-to-end solutions, connecting financial institutions, corporations, merchants and consumers to one another behind the scenes. The Fortune 500 firm is the No. 1 credit card processor in India, handling seven of the 12 largest issuer. In an interview with Jyoti Banthia and Namit Gupta, Fiserv's Country head and GM, Rishi Chhabra talks about the company's business in India, and on the country's digital thrust and what it could mean for his firm. Edited excerpts:

You virtually dominate the card transaction ecosystem in India. What exactly are you doing in this space?

Globally, we are an almost 40-year-old company with the lion's share of the core-banking business in the US and 100 other countries. In mid-2019, two big companies--Fiserv and First Data--came together and started doing very complementary things in the financial services space.

Fiserv has historically provided core banking services and other financial services such as P2P payments. First Data focused on payment technology for financial institutions and merchants. Today Fiserv focuses on three core areas - One is merchant acceptance--helping merchants like where we are sitting right now (coffee outlet in Powai, Mumbai), to accept electronic payments--card swipes, the machines, the technology, and everything beyond including online, offline, omnichannel, and e-commerce. Then we have a payments business focusing on credit card and debit card processing . Your card, for instance, which has been issued by a bank, has to run on a platform that tracks and processes all your card details from end to end. First Data was a pioneer in that space. So we work on both sides--we work with the banks, we work with the merchants. Then we have the fintech business. These three pillars constitute the $16 billion business that Fiserv runs. 

What about your India operations?

In India we were informally known as First Data, the company we acquired. We've been in the market for a good 12 years. We are primarily into two businesses--merchant acceptance, where we are known in the marketplace as ICICI Merchant Services (IMS). This is a JV with ICICI Bank in which we hold a majority stake. While ICICI Bank helps merchants open current accounts or savings accounts and provides them with banking services, we step in through IMS to offer them PoS terminals, e-commerce, all payment related technology. So essentially the merchant gets payments  services and infrastructure all under one umbrella. Through IMS, we have access to the  ICICI Bank branch network. IMS has double-digit market share in acquiring, both in e-commerce and at the pointof sale, powering over 850,000 merchant locations. We provide innovative solutions to merchants leveraging our market-leading digital stack. The size and scale of our business in India positions Fiserv uniquely to support the smallest merchant to the largest, most complex clients in the country.

Second, we work directly with the banks on card issuance. Our processing platform, FirstVision, is run at our  data centre. We have seven of the top-12 banks (card issuers) on our platform, through which the entire credit card journey is processed. If the bank has a credit card or related mobile  app, they can put that up on our platform as well. The core processing of the card–transaction authorisation and the entire account management – the pincode, the shipping details, the EMIs, interest rate calculation, payment reconciliation,–reward points earned and redeemed, return of goods, the works, including disputes and chargebacks. You as a cardholder wouldn’t know us, and would only recognise the issuer (the bank) and the network scheme, but the banks and merchants know us very well. In fact in the merchant acceptance space, we power over 850,000 merchant locations in the in-store, brick-and-mortar space. We have a huge presence even in online transactions.

Some banks have even gone a step further and have engaged us to manage their back-office operations for them. So we do this through our operations centre in Thane, near Mumbai, which currently has about 1,000-plus employees.

What kind of challenges did you face during Covid period, especially when RBI's moratorium was in place?

We had to make a lot of changes on our platform, including the cessation of payments, EMIs, interest charges, during the six-month Covid-induced moratorium --all the magic happened behind the scenes-- in order for the banks to be RBI-compliant. In fact, we've been quick to meet RBI guidelines outside Covid as well. For instance, our platform helped our banking clients become compliant on data localisation.

What are your thoughts on the new RBI guidelines on offline payments that cap the upper limit of such transactions at Rs 200 and the total limit on a payment instrument at Rs 2,000? How will it boost digital payments? Will it help you establish a presence in low internet-connectivity areas?

Digital payments adoption in India has been primarily fuelled by the availability of affordable smart phones, increased internet penetration and a growing network of PoS terminals. The RBI guideline on offline payments is a positive move to boost the penetration of digital payments in areas with limited connectivity. With a significant number of transactions still being small ticket-high frequency, this move will help ensure last mile access to payment solutions, spread digital literacy and promote financial inclusion.

Geo-tagging the payment acceptance infrastructure is a substantial enhancement and another progressive move. Geo-tagging will provide exact information on the deployment of acceptance infrastructure on an ongoing basis, and will help ensure a balanced spread of the payment acceptance infrastructure across the length and breadth of the country.

The government’s digital push has led to an increase in UPI payments, credit card usage, among other digital payments services. What do you think the next quarter would look like for you?

Digital payments adoption is well entrenched in India with a substantial number of Indian households using the mechanism in some form or the other.

As we move ahead, we will continue to see a tectonic shift in the way money is moved. Consumers' expectations are shifting from basic transactional interactions to enriched digital experiences as they become accustomed to things happening instantly. The number of payment terminals in tier-1, 2, and 3 cities will continue to grow, with merchants wanting to accept card and digital payments to offer a seamless payment experience to their customers.

Several fintech platforms are also diversifying their product portfolio. Do you have such plans for the future?

Fintechs are creating and offering tailored products that are exactly what businesses and consumers want and need. In India, the positive and progressive ecosystem created by the regulator has led to new-age companies or start-ups joining hands with traditional players and playing a remarkable role in boosting financial inclusion.

On the merchant acquiring front, we constantly innovate to offer relevant and appealing value-added services to our clients. Services such as instant settlement, fuel purchase via FASTag, mobile commerce payments and so on. With respect to our card issuing platform, we are enabling more APIs and micro services for financial institutions to consume. Our recent collaboration with NPCI to enable the launch of ‘nFiNi’, a ready stack of services that fintechs and banks can use to issue RuPay credit cards, is one such step in that direction.

How do you see CBDC disrupting businesses?

While central bank digital currencies are still in the early stages, we anticipate they will have widespread utility as demand for digital money movement grows, particularly for higher value digital transactions and cross-border transactions.

What are your plans for India and your vision for the next 5 years?

India continues to be one of the most vibrant emerging markets across the globe. The market represents tremendous opportunities given the digitalisation push by the government and the ongoing innovations in the payments space.

Our vision is to facilitate collaboration by becoming a central point for innovation and strategic partnerships across the entire scope of our tools and platforms, thereby providing a seamless experience for merchants and financial institutions to consume technology, and, more importantly, deliver a best-in-class experience to their customers. We are keen to combine the power of our issuing and acquiring platforms to enable our clients to gain valuable insights on customer payment data and use this for growing their business in a meaningful way.

We remain focused on enhancing the way merchants consume payment services through the ongoing introduction of innovative and relevant end-to-end solutions that allow them to manage their business and payment needs. We have 850,000 merchant  locations on our network today and plan to ramp that up month-on-month. We process over 1.2 billion transactions annually in the online and offline space, and this will continue to grow as we see more merchants and end-consumers wanting to accept and pay digitally. We continue to work toward delivering the next phase of open architecture offerings in the payments space, making affordable technology available for the fintech ecosystem of India by continuing to invest in our local payment platforms to facilitate cloud native and API-enabled integrations.