Jitendra Gupta, founder of Citrus Pay and managing director of PayU India, talks about the evolution of the space and what lies ahead
With PayU foraying into the lending space with LazyPay, what kind of reception and competition do you anticipate?
The demand for lending is enormous in India. In my view, this opportunity is worth more than $1 trillion and existing companies cannot meet this demand. LazyPay is addressing the segment that hasn’t been issued credit cards by banks due to inherent risk assessment and cost of delivery. LazyPay has innovated the space by providing credit as low as $1 to $2,000 at virtually zero cost of delivery and within a few minutes. We now deliver more than 1 million loans per month.
How much has the digital payments space evolved over the past decade?
Thedigital payments industry has come a long way in the past eight years. There is greater awareness among consumers, and the penetration of internet connected devices has increased. More businesses are now accepting digital payments and the government has been pushing it to the last mile. In my view, every possible positive thing which one can think of in favour of digital payments is happening. This is the best time to be in this space as growth rates will continue to be around 25-30% in this sector for a long time.
Has the shift of consumer behaviour towards digital payments been fuelled by the growth of the fintech sector or is it the other way round?
I think it is other way round. That is to say, fintechs are booming due to the increased adoption of digital payments. That being said, I don’t want to take away from the excellent work done by fintech companies to provide seamless availability of digital payment options. Entities in this space have infused a significant amount of money in cashbacks, which has effectively established digital payment habits among customers.
What is the edge fintech companies have over traditional institutions like banks?
Fintech companies have an edge in terms of agility. They tend to innovate and think of solutions from the ground up rather than worrying about legacy systems like banks have to. On the other hand, banks have an edge in terms of consumer trust and the deposit franchise they have.
The internet user base in India has crossed 500 million. How do you think the widespread access to technology has affected this space?
Access to technology has played a crucial role in the popularisation of the fintech segment. It has facilitated platforms like UPI, which allows one to move money seamlessly. Similarly, digital lending has become a convenient and widely used option for consumers because it provides them instant affordability to make purchases. Clearly, technology has changed the way we consume services. Could you have imagined ordering food or a cab at the click of a button five years ago? Life has become so much easier and made consumers lazier.
Fintech has progressed from being just payment oriented to include everything from lending to insurance. What does the future look like?
Fintech itself means an amalgamation of finance and technology. Financial services and products are consumed by every consumer in one form or another. So it is a natural path of progression for fintech companies to enter each area of finance, from payments and lending to peer-to-peer transfers, insurance, wealth management and broking.
This also means that existing financial service providers will be under pressure to keep pace with evolving consumer expectations and come to terms with the fact that consumers are increasingly looking for better user experience on a day-to-day basis. Consumers will choose which providers they will transact with based on their experiences.
What is your opinion of RBI issuing consumer protection rules for mobile wallets?
I strongly endorse this RBI action. It brings wallets on par with other deposit holding products. Consumers’ trust on wallets will increase only when there is a formal grievance redressal mechanism. Overall, it a good step.
RBI guidelines dictate that e-wallet companies will have to setup a 24x7 customer helplines to receive fraud reports. Will the back-end operation have to be stepped up? Will it become a financial burden?
This definitely makes wallet business a more serious operation. Wallet companies need to invest into manpower to manage call centre operations. While this is a good step from the consumer perspective, running 24x7 call centres can overburden companies. I think RBI should establish a mechanism of prevention and resolution of fraud rather than focusing on the specifics of how to implement it.
This is not a financial burden as liability coverage is required to ensure consumer confidence in the financial ecosystem. It should have been done much earlier. The consumer’s money is at stake, so one has to be very cautious in dealing with it.
Are anti-fraud measures already in place for e-wallet transactions?
Yes. As per RBI guidelines, every wallet company has to have anti-fraud measures. These measures are mainly used to detect frauds based on certain patterns or unusual activity in wallet accounts.
Innovations related to KYC are on the anvil
What major innovations or changes do you foresee in the fintech space?
I see innovations related to the KYC process as that is basic infrastructure used by fintech companies. Further, it will be interesting to see how companies leverage technologies such as AI and machine learning to provide personalised services to consumers based on their preferences and demands. I am also eagerly waiting to see the formal launch of WhatsApp Pay, as that can be a game changer for the Indian digital ecosystem. It can potentially bring another 100 million new consumers into the digital finance ecosystem. Lastly, I believe that a new breed of banks will soon emerge, which will be mobile-first banks. This will, of course, be subject to RBI (Reserve Bank of India) approval.
The digital payments ecosystem in India has seen exciting developments in the past few years, including increasing technology adoption and a firm government push. Jitendra Gupta, founder of Citrus Pay and managing director of PayU India, an online payment gateway, talks about the evolution of the space and what lies ahead