After joining National Payments Corporation of India (NPCI) as MD & CEO over five years ago, AP Hota has been instrumental in building the central infrastructure for various retail payment systems in the country. In an interview with Kumar Shankar Roy, he shares the progress of different initiatives and talks about soon-to-be-launched projects like IMPS Plus and Bharat Bill Payment System. Excerpts:
How is India placed in terms of retail payments?
There are very few countries in the world where all the ATMs are inter-operable. That credit goes to India. This feat has been possible because of National Financial Switch. Also, India was the second country in the world (after the UK) to start the real time money transfer system. But we can say we are the first country in the world which has the real time money transfer system 24X7. This is because in the UK they had the two-hour window to give credit to the customer account. In our case, it’s instantaneous. We led the world in retail real-time money transfer. In fact, the US has taken a decision just three days back to build a real time money transfer system.
Some seem to suggest that government favoured NPCI’s RuPay for giving out PMJDY cards. Is that so?
The government evaluated all types of cards. Even before Pradhan Manti Jan-Dhan Yojana (PMJDY), there was in-built accident insurance of Rs 1 lakh and for a special category of cards the insurance was Rs 2 lakh. When PMJDY was being launched, they thought along with opening of bank account people should have access to accident insurance also. The government chose RuPay because of the product’s intrinsic strengths. By that time, we had also customised the card to local requirements. We had worked with states, including Madhya Pradesh and Rajasthan, for special cards. Today, we have issued 16.34 crore RuPay cards under PMJDY.
One of your competitors suggested that there needs to be a level-playing field in India. Every big payment systems contract is being bagged by NPCI…
The Reserve Bank had published the payment systems vision document some years ago. Two critical suggestions were made — creation of a national level payment system organisation which will manage all types of retail payment systems in the country, and two, to examine the feasibility of a domestic card payment network to process country’s card payment transactions within the country. We have executed that grand vision after NPCI was commissioned in 2009. Yes, NPCI is an Indian organisation. All the contracts that we have bagged are on account of our strengths. What’s wrong in wanting to serve the nation with a domestic system? Is it wrong to be patriotic?
NPCI is actually Make in India version of a world class payment system. We should only be questioned if we are not delivering results and if we are inefficient.
NPCI is also doing lots of other things. How well-placed are you to take all that load?
We have upgraded our subsidy (DBT) platform capacity from daily 20 million (transactions) to 50 million. We are right now processing only 4 million. NPCI has three main platforms – for cards, DBT and cheque clearing. NPCI is like the Indian Railways kind of utility for the payments infrastructure in the country. We are a systematically important payment system for these reasons. We are a not-for-profit organisation.
You are not for profit but how do you make money? Where do you invest?
We charge 45 paise (per transaction) for ATM service, 20 paise for ACH service, 50 paise for IMPS service and for e-commerce service we charge 90 paise. Our revenues are giving enough support to expand our capacity. Our investments are in the form of upgrading our switch capacity to 100 million from 40 million transactions at present. Besides, we are investing in a new type of mobile payment system called Unified Payment Interface (UPI), which we propose to name as IMPS Plus.
How would IMPS and IMPS Plus be different?
At present, there is a lot of data entry for sending money through IMPS (Immediate Payment Service). IMPS Plus will make all that easie. Our target to launch IMPS Plus is January 2016. As many as 11 banks are joining the pilot project and we just had a review meeting. In IMPS, you can send money instantly but what if you want to collect money instantly? That facility is not there in IMPS and in IMPS Plus both sending and collecting money is possible. This will be all smart phone based. The phone becomes your identity. We will start with some banks and then expand it gradually.
When will Bharat Bill Payment System (BBPS) be launched?
The RBI has already invited applications for authorisation from entities at present engaged in bill payments and desirous of operating as BBPS operating units. The BBPS will be an authorised payment system operated by NPCI. We want to start the pilot by April 2016 and launch it by June as per mandate.