Do you see India becoming a cashless society?
Dilip Asbe: In three to five years’ time, if we have a cash-to-GDP ratio in single digits, we would be happy. It’s a large country with different languages, awareness, etc. A less-cash society with a cash-to-GDP ratio in single digits would be a huge success in India’s digital payment journey.
Rishi Gupta: Becoming a cashless society is a far-fetched dream for India, but less cash is more achievable. A lot of fintechs and banks have started focusing on the mass segment to jump on the digital bandwagon. The data shows we are moving in the right direction.
Sandeep Ghosh: About $1.6 trillion of personal consumption expenditure takes place in India, of which currently 55-60 per cent is still cash. We have made phenomenal progress in the last five years in terms of digitisation. But over 50 per cent of the volume is still cash. So, there is a fair distance to traverse and a significant amount of cash displacement opportunity.
Ganesh Ananthanarayanan: While digital transactions have grown significantly, in the next five years, both cash and digital transactions will coexist. The share of cash in circulation will keep dropping. In five years, we may be the fastest-growing, because we’ve done a lot of innovation in the last five years. And innovations in the pipeline will help accelerate the adoption of digital payments.
Parag Rao: We have seen digital transactions grow but cash is still growing. We have to continue plugging away at getting digital payments accepted. Two things need to change. First, the phenomenon of tax avoidance. Second, leakage of government transfers needs to be plugged.
Is there a level playing field in the payments space?
Vishwas Patel: With the regulations RBI is bringing in, a level playing field seems to be developing. These kinds of regulations sometimes are beneficial in the long term, but in the short term they create havoc.
Ananthanarayanan: We have been in the business for six years and have 55 million monthly transacting users. Our revenue is growing and we are profitable. The regulations have changed with the times. Some of these things have worked well. One thing we ask of the regulator is to allow small-ticket lending as an enabler. It will make a big difference in driving financial inclusion.
Have payments banks discovered the business model?
Gupta: All of us are grappling with what kind of business model is sustainable. Unlike many other fintechs where the model is largely around investor money, payments banks are looking at sustainability as the model in the long run. All of us are following similar models.
From the time we started, questions have been asked on whether payments banks can make money. We have an asset-light scalable model where, rather than having higher fixed costs by setting up more branches, we are driven by technology and the merchant ecosystem. We have been able to expand quite fast. In our five-year journey, we have been profitable for three years.
We have been impressing upon the regulator that this is one of the largest infrastructures created in the banking segment in the last five years. There are more than 2-3 million touch points across the country. It can be put to better use so that we can offer small loans to the 70-80 million customers who come to our platforms every month and raise deposits.
Is collaboration the way forward?
Rao: In an ideal scenario, every player should adapt and become a master of all, but that is not the reality. I see three approaches to the market playing out. First platformication; second, embedded finance; and third, disrupting existing use-cases and expanding the market. I don’t see any one player doing all three and that is where partnerships come in. So, partnerships are the way forward.
What does the word ‘digital’ mean to card players?
Ghosh: In a digital world, things are interconnected. You’ve got customers who’ve been acquired, who are transacting, who keep balances, and they also have a need for credit.
Just as the RTP (real-time payments) rails in India — notably UPI (Unified Payments Interface) — have democratised payments, we need to democratise credit. Payments banks can play a huge role in that respect.
On partnerships, as Visa we partner with HDFC Bank, which is the largest issuer of cards in the country. We also partner with CC Avenues, which has a role in the payments ecosystem. Further, we partner with payments banks who currently issue debit and prepaid cards. We have an opportunity to partner with NPCI (National Payments Corporation of India), because we have a payment gateway offering, which processes transactions on all networks. So, partnerships are fundamental to everything digital, as no one organisation will have the stack to do everything.
How do you see the evolution of India’s payments system?
Asbe: Digital transactions in the country are not even at one-third coverage. Large volumes are still in cash, which is predominantly small-ticket transactions. A lot more action will be required to map that two-thirds portion.
How can yesterday’s regulations be made more relevant?
Patel: The RBI will have to constantly evolve in the matter of regulations. It can’t have static regulations. We have seen many notifications put up by RBI earlier being continuously amended on a monthly basis, to keep up with the times.
 "digital payments, ATM, cashless")