Arvind Ronta on why UPI spells opportunities, not challenges for Visa

With UPI (unified payments interface) surpassing a billion transactions a month over the past couple of months, the digital payments technology has overtaken debit and credit card transaction volumes. This has visibly shaken players such as Visa and Mastercard, who power card-based transactions globally.

San Francisco headquartered payments major firm Visa has already recognised India as one of the global hubs for fintech innovation. The company has a technology centre in the country, where a team of 1,200 is developing global products. The local business team also works with partners in India to develop products for this market, which can subsequently be rolled out in similar markets overseas.

In a recent interview with TechCircle, Arvind Ronta, head of products for Visa in India and South Asia, spoke about the challenges the fintech revolution poses to the company. Ronta, who took charge two years ago, said that while UPI has digitised a large segment of payments in India, it is still dominated by small-ticket transactions and person-to-person transfers. The large merchant transactions still happen over cards and therefore Visa not overly worried. The company, he added, is also working with players such as Flipkart, Google Pay and Amazon to build new products.

Ronta was previously with Discover Financial Services, which operates Diners Club cards, as its head for emerging markets. He was also a consultant for Deloitte in the payments space. Ronta said Visa’s recent initiatives to work with startups and other emerging fintech players gives the company the opportunity to build and scale its India operations. 

Edited excerpts:

Tell us more about the Visa Everywhere initiative.

It's a fairly mature programme since its inception in 2015 in the US. It’s one of several initiatives we have launched for fintechs in the last three to four years, and it is a challenge programme.

The programme is structured to drive our engagement with fintech companies and is the largest fintech outreach programme. It has been rolled out in six different continents and more than 6,000 startups have already been part of it. Fintechs who have been part of the programme have raised more than $2.5 billion in different markets. 

We give fintechs three problem statements that are structured around the core issues facing digital payments in India. These could be around driving digital insurance and credit, adoption of small merchant acceptance, or driving the digitisation of the B2B value chain. The fintechs are going to work on these challenges, come back with their solutions, prototypes and pitches. They can take any of our 90 open application programming interfaces (APIs) that we have enabled on our Sandbox India, and also enabled some of the partner bank API's that they can use to stitch a solution around each of these problem statements. 

What fintechs get out of it is access to Visa's assets, the mentorship that we will provide apart from the fact that you are associating with the brand Visa, which can get a lot of visibility on the world stage. It also makes it easier for some of these fintechs who are looking to expand beyond India to get the word out through the platform. 

We announced it (the programme) two or three weeks ago and we have already got more than 200 companies signing up for this.

What are the products that you have tailored for India?

In the last three years, every year, we have launched something unique to drive more fintech adoption in India. In 2017, we launched the developer portal in the country, which now has 90 APIs, which is accessible to any fintech in India without a single contract to access the Sandbox environment. 

Some of these are ATM locators or transaction controls or fraud monitoring that give access to create new experiences. Last year, we saw a hockey stick adoption of fintechs in India for leveraging that API sandbox.

In 2018, we launched something called the Visa Ready programme. We certify and standardise solution providers and fintechs, which actually gets them visibility at a global stage. Any of our partner banks or other companies that we work with recognise them as a Visa Ready partner. 

Early this year, we started ramping up our FinTech Fast Track programme, a process by which we can onboard fintechs faster. We reduced the onboarding timeline by 60-70%. And, we also gave incentives and some fee rebates for fintechs, which met certain criteria.

So this is our fourth offering, to get fintechs engaged in solving India problems, leverage the APIs to become a Visa Ready partner, and eventually sign up for the FinTech fast track that we launched last year. So it's really coming full circle.

As a head of product, is getting fintechs on board part of your mandate?

Think of us as a platform of many technologies, many form factors. We have created a network of partners where we can nurture the ecosystem around any of the set technologies that we have and we have been able to do that very well in different markets. 

When I think of fintechs, they are the bridge for bringing solutions to the market, as enablers of bringing core Visa products. A lot of our digital products, which we drive in markets like India and other markets, are enabled through a fintech partnership with the bank, to take our solutions to market for end consumers and business customers. 

The second piece of the fintech partnership is hugely important as we also working with them to build new solutions. In the last few years, Visa has invested tremendously in the Indian market, and with the engineering support of our India team, we are building our products for the globe. For instance, some of the stuff we are doing around instalments, around authentication and other online products.

How do you view the prevailing landscape in India with UPI increasingly cornering a larger market share and players such as Visa and Mastercard being pushed out of digital transactions?

Introducing something like UPI as competition is good for us. A rising tide lifts all boats. One of the best things that has happened as a result of UPI is that more people have gotten into the fold of digital payments. UPI as a railroad has driven some sort of stickiness on the use cases around payments and I think that we will have a fair share of the market. 

We are honestly not worried about UPI. We see ourselves as a platform with world class capabilities when it comes to processing, fraud and risk management and we work with real-time payment platforms in countries such as the US and Canada. And, when UPI scales up, we will see some of those areas that will need our help. It is a partnership opportunity.

We have a partnership with our competitors, MasterCard and Amex, on secure remote commerce as standard to make online payments more secure. Similarly, with respect to tokenisation (a unique alternate code that replaces actual card details for use in contactless card transactions), contactless payments, and other schemes. 

As for fintech monetisation, it is very early to say honestly, and it makes sense once you have a certain scale. What we are already seeing is that some of the fintechs are morphing from payments to lending to monetise and thereby creating an experience layer for banks. 

So, the account is serviced by the bank, and all the risk management or the regulatory, licensing and everything is managed by the bank. These fintechs or you can call them new banks are taking control of the customer experience, customer onboarding and customer acquisition, areas in which banks desperately need help. And, they've been reaching out to us and directly working with some of these fintechs or working through us with these fintechs. They are partnering with Visa to leverage the power of the network, the banking infrastructure in India to drive differentiation and scale and over time find ways to monetise.

But then are you not getting locked out of a large share of digital payments, with UPI overtaking credit and debit card transactions?

No, it is actually the opposite. They did one billion transactions last month, clearly, far more than credit and debit combined. But it is mostly P2P, almost 70%. If you take P2M, not a small merchant, then it is still cards. Clearly UPI is an option. But, just to give you some perspective, the way you create a UPI handle is by putting up your Visa or MasterCard to authenticate. So we believe nine out of 10 customers who are doing that in India already have a card.

Low ticket value transactions are definitely more predisposed to using UPI because the alternatives for low ticket transactions are yet to match up to UPI.

We are not worried because think of the scale that Visa has. We are stitching together 16,000 financial institutions worldwide. We also announced tokenisation with Google Pay. So soon, you will have a Visa card inside Google Pay, which you can use anywhere in the world. You can't use UPI outside of India, you can use Google Pay in that form factor in any form of transaction like in the app or for QR codes. The modes we offer far exceed any of the other alternatives in the market.

With the kind of innovations that are happening in the fintech sector in India, do you see that kind of recognition being given to the Visa India office from the global organisation?

It has already happened. In the last one year, we have been building products for India from here, which are then exported to similar markets. In markets where we have this two-factor authentication, in markets such as Europe, Indonesia, Mexico, you can use what we are building here. Bengaluru, where we have such a strong engineering talent, we are in the midst of building products alongside Flipkart and Amazon. And you will see those announcements coming out soon. In the business team, we are a 100-plus team. At the global technology centre in India, which develops products globally, we have upwards of 1,200 people.