Payments monetisation tough, but here for the long term: NTT Data Payments

NTT Data says India remains its most important payments market despite zero MDR challenges, as it expands Adaptis and invests in value-added payment solutions

NTT Data Payment Services, the digital payments processing arm of Japanese conglomerate NTT Data, is deepening its presence in India and other key Southeast Asian markets, such as Malaysia, Thailand, the Philippines and Vietnam, by consolidating its acceptance, merchant solutions, value-added services, and commerce capabilities under a single brand, Adaptis. Global attention beckons India’s growing epayment market, even as monetisation remains a challenge, explain Shinichiro Nishikawa, head of global payments strategy and transformation at NTT Data Japan, and Takeo Ueno, whole-time director and chief executive officer, and Rahul Jain, chief financial officer, of NTT Data Payment Services India, in a sit-down interview with Ajinkya Kawale. Edited excerpts:

 

Where does India stand in your global portfolio of epayment markets?

 

Shinichiro Nishikawa (SN): India is the most important country because of the payment industry and changing dynamic, which is exciting. Our payments business started in Japan over 40 years ago. We started expanding outside Japan around 2010. We are very surprised at the (scale of) Unified Payments Interface (UPI), and the cashless ratio. We are providing our capabilities from Japan and other regions combined with changes in India to drive a cashless society.

 

From a revenue and profitability point of view, how is India placed for you?

 

SN: The Indian market is very challenging because of the zero merchant discount rate (MDR), particularly on UPI. This is a challenge only in India, but it is important to give a rocket start to drive a cashless society. It is a long-term relationship for us in collaborating with stakeholders here.

 

Why is India's digital payments market overcrowded, and how do these venture capital-backed firms sustain discounted pricing amid intense competition?

 

SN: We have been in the (global) industry for a long time, and discounting happens very often. But, we are confident about our merchants and clients. Dumping prices like this is not sustainable.

 

Takeo Ueno (TU): We are committed to the country and are 100 per cent owned by NTT Data. It is not a financial investor who looks at a short-term investment and later takes an exit. Commercials are low and very competitive in India. We focus on industries such as banking, financial services, and insurance (BFSI), education, and petrol, and fulfil all types of payment methods. In the future, we can procure other payment options from Asia.

 

In that case, what would ensure long-term sustainability for you in India?

 

Rahul Jain (RJ): Currently the market is very challenging with respect to the profitability of most of the payment aggregators except a few large ones with high market share. In the long term, there are revenues and opportunities where we are investing. Many players are looking at investments in cross-border markets and GIFT City. We are positioned well since we run payments in global markets. In those markets, around 15-20 per cent of the merchants would also need to enable the Indian payment options.

 

Do you have plans for acquiring new companies or any other investments?

 

TU: We will continuously put huge money into the quality and operation automation in the next three years. We plan to open for cross-border payments and are opening Adaptis to the India market. We may look at acquisition only when a new licence is required or a new area like financing is in the plan.

 

RJ: The objective that everyone is driving is how one can become a solution provider rather than only a payment gateway provider. This is where our methodology is coming from an investment perspective where we want to look at value-added services, which we can take to our customers so that they don’t require multiple platform integrations. It’s a logical extension.