UPI driving digital shift in India, but is not a money maker: Mastercard CFO

UPI driving digital shift in India, but is not a money maker: Mastercard CFO

Mastercard, the world’s second-largest payments network, said India‘s Unified Payments Interface (UPI) is a loss-making proposition for the players in the ecosystem even as it driving digitisation in the country.

“UPI is fantastic at many levels in terms of what it has done to create digitisation in the economy. It is an incredibly painful experience for ecosystem participants, who all end up losing money as part of that proposition. We continue to see good growth on our debit and credit proposition, and we see there to be a lot of potential on a going-forward basis there,” Sachin Mehra, chief financial officer at Mastercard, told investors at the UBS Fintech Leaders Conference.

UPI, introduced in 2016, has been a game changer in the payments ecosystem in India, easing payments and transfers and playing a key role in digital adoption in the country. In June, UPI transactions grew 46% compared to 26% for credit card spends and a 9% decline in spends on debit cards.

Mastercard said India continues to be a very important market and it will continue to compete despite the challenge.
“We want to compete, where we can do so while actually making sure that the ecosystem makes money. India is a little challenged in that regard when you have the likes of UPI,” said Mehra.Earlier this week, Mastercard named former State Bank of India chair Rajnish Kumar as the chairman of its Indian business.Last month, UPI recorded more than 10 billion transactions for about ₹15,18,456 crore, according to the National Payments Corporation of India (NPCI). Having grown to a solid user base of 260 million in the country, possibilities are now being explored to expand the network to other countries, with a key focus on remittance-heavy countries such as the US, UAE and Singapore.”Early this year, India’s UPI was linked with Singapore’s PayNow, allowing Indian users to remit up to SGD 1,000 per day. The core focus area in expansion abroad has been the non-resident Indians, as wider expansion in markets like (the) US face several challenges from lobbying by card companies like Visa and Mastercard,” said a recent report by Bernstein.

India, which has primarily been a cash-based economy, now leads the world in real-time digital payments, accounting for almost 40% of all such transactions. However, the adoption of payments other than cash in online retailing is still nascent.

“Cash on delivery (COD) transactions is about $30 billion of the ecommerce market in India, making up more than 50% of the payment mix,” said Chirag Taneja, CEO of GoKwik, an ecommerce enabler. “COD continues to be the most predominant choice of payment for ecommerce shoppers, especially from tier-1 and beyond. The use of digital currency has also been on the rise, largely led by UPI transactions.”

Global payments technology company and Mastercard’s rival Visa said instant payment platform Pix in Brazil and UPI in India brought more people into the formal banking system since these markets had low levels of penetration of the card business or the banking penetration compared to the UK and the US.

Source link

Spread the word!

Leave a Comment

Your email address will not be published. Required fields are marked *