Mumbai State Bank of India (SBI), India’s largest lender, through its joint venture with Hitachi Payment Services Pvt Ltd. Ltd., a wholly owned subsidiary of Hitachi Limited of Japan, is running back-end operations for one million point-of-sale (PoS) terminals, in addition to another 700,000 terminals, with other acquirers. It is also working on acceptance network for cashless payment voucher e-Rupee, which is supported by Domestic Unified Payment Interface (UPI). Anuj Khosla, chief executive officer, digital business, Hitachi Payments, said in an interview that despite overtaking other payment methods, UPI needs more time to become a global player. Edited excerpt:
What kind of work have you done through SBI Payment Services, JV?
The JV was formed in 2018 and commenced operations in January 2019. The idea was that the merchant acquisition business is both technology- and distribution-driven, and while SBI brought its distribution, Hitachi brought in the technology piece.
The joint venture began to build a digital acceptance footprint. The charter was to do all forms of payment such as PoS, electronic toll collection (ETC), quick response, or QR, code and now also a payment gateway. At present, there are around one million PoS devices under it and about 2.6 million total merchant touchpoints. Going forward, the joint venture will bring more technology-driven platforms.
Will UPI become the primary mode of digital payment?
Though UPI transactions have performed very well, there is still some time left for it to be a true global payment mode.
If you think about card transactions, it gives you an all-encompassing user experience no matter where you go: be it a petrol pump in a remote location in India or a large format store in New York. Some other payment modes, while they are quite popular in their respective countries, the user experience is not standard across geographies.
Are you seeing demand for use of e-rupee?
The good thing about e-Rupee implementation is that it has many use cases. Usually, in a regular QR transaction, the merchant shows the QR and the consumer uses an app to scan it and make the payment. In e-Rupee, the consumer shows the QR and the merchant has to scan it.
We have upgraded SBI’s YONO Merchant App to accept e-Rupee Vouchers. Now, e-Rupee is being extended to other use cases such as fertilizer payments, education scholarships and other direct benefit transfers. The Reserve Bank of India (RBI) has recently increased the limit and allowed staggered redemption of e-rupee vouchers. Such moves will help the industry find more use cases.
We are already seeing a lot of interest from the State Governments for various programmes. For example, Karnataka wanted to participate in it for education payment and another state is using it for fertilizer direct benefit transfer. As we speak, SBI Payments is discussing such opportunities with state governments and departments to broaden e-Rupee.
How important will offline payments play in India?
There is a perception that offline payments will be popular only in Tier-IV, -V and -VI centers where telecom infrastructure is a challenge. If you ask me, sometimes it is a challenge even in big cities. Try booking a cab at the airport during peak hours, or pay at the mall during sales season. Telecom bandwidth just gets choked. My understanding is that offline payments will find many use cases.
That said, there are indeed places where telecom infrastructure is a challenge. In-flight offline payments and other such offline payments are good use cases for offline UPI transactions.
However, I’m not sure how quickly this can be done because acquaintances will have to pitch it. This is going to be the future and I am sure SBI Payments is being discussed and done some demos on it. This is an interesting proposition.
Will the central bank’s digital currency be an opportunity for Hitachi payment services?
It’s a very interesting opportunity and we’ve done some work in Japan. As a group, Hitachi has some great experience managing the value chain. In India, we also believe that once this becomes a reality we can play an important role with SBI and we get more clarity on how it will be implemented. We will be an important player here as well, as we have learned from other markets, especially Japan, to handle these transactions.