Digital payments in India have seen accelerated uptake following the government’s push for a less-cash economy. PayU is a fintech company that provides payment technology to online merchants and also has a presence in the credit space with LazyPay. In a conversation with Mint, Laurent le Moal, company’s CEO, talks about the company’s plans to build a data-based platform and digital ecosystem in India.
PayU has a global footprint. How do you think India is different as a market?
When you look at India, the market is a growing one; so you need new solutions. The card system is there, but it’s not coping with the growth in the market. So you see innovations like unified payments interface (UPI), which the government is pushing. In mature markets, the thinking is that innovation must come from private actors, but in this case you can see that innovation can be in the hands of public players. UPI is also a platform that has opened up innovation for a lot of different players. There is growth in South-east Asia as a whole, but there isn’t as much innovation coming from public actors. That is what makes India truly one of the most interesting playgrounds in terms of an ecosystem.
Despite the digital push, India is still a largely cash-based economy. Do you think there is suspicion about digital payments among customers in India?
I have never seen a payment instrument displace the one that came before it. It just adds on top of what is already present. Further, it takes at least one generation, if not more, to change consumer behaviour.
For us, it’s a bit different. Digital payments taking off has shown incremental volumes. These were transactions that people were not doing before this. The new affluent middle class, which is huge in India, is the one that is using their phone for payments. The rest of the population will come to that as well.
Trust is fundamental. When you are a company doing billions in business in India alone, it’s our responsibility to create that trust in the system. But trust is not enough. You have to bring in the element of convenience. In India, we have the opportunity to create new products purely based on convenience. One example is Lazypay. It’s not a credit product. People want to buy stuff now and pay later; so we are decoupling the two.
Like Lazypay, many other platforms are making an easy line of credit available to customers. Do you think this can be a slippery slope for borrowers?
In general, financial literacy is very important. People should have the tool to understand how you make and spend money. It also has to do with how they should save—especially for specific goals. Technology can help a lot in this context. We have seen this in many markets. Actors like us shouldn’t wait for the regulator to tell us what to do. We should be ahead of the regulator in terms of social responsibility and self regulate ourselves. This is what responsible lending should be. We are also answerable to our investors and board about whether we are going about this opportunity in a responsible way.
Financial advisory is another aspect that has become very important and we are focusing on that aspect, too, as part of the ecosystem.
There are companies in the Indian market like Paytm that offer multiple services like payments and equity investing. Is that what PayU is setting out to do?
What we are doing is building an ecosystem, which in our context means payments, credit and digital-led financial services. It’s made up of a bunch of providers who are partners in different forms, coming together to meet the needs of consumers and merchants on these three needs. It’s not us doing it alone. We work closely with banks, other financial institutions, fintechs, and other partners to co-create an ecosystem. We are just orchestrating it.
To create a platform, what we build has to be open from the get-go. That’s easier said than done. But that’s the way we think about our credit platform. Take any big wallet in India and we are happy to be their platform for credit. To build an ecosystem, we also need to think around the consumer. Consumers have different payment providers for different things—wallets, banks, apps for investing in mutual funds, and so on. You show a different view of yourself to each of these providers. We want to get a 360-degree view of the consumer by working with different providers, giving them access to our platform, which has a lot of consumers, merchants and their data, and vice versa. We also get access to their data, which gives us a particular view of the consumer to complete the picture. The more I know about who you are and what you aspire to do, the more I will be in a position to improve my products and build new products that suit your needs. If we have the data in place, we will be able to provide customized products to the consumer and accelerate innovation. It is also going to drive financial inclusion. Data can underwrite the risk of providing credit and financial services to people that banks won’t serve, because they have no way to manage the risk. One way to go about this is to make small investments in different providers to establish a partnership. This is what we are starting to do now to accelerate the formation of the ecosystem.