Ever since the pandemic broke out, PayPal has seen greater adoption of digital payments across the world, more specifically in smaller towns in India, Anupam Pahuja, the company’s Vice President — India, South East Asia, Middle East and Africa, said in an interview. Edited excerpts:
What is the future of digital payments and cash post-COVID-19 in India?
Digital payments have made rapid progress with the support of the government and the regulator creating a favourable regulatory policy and environment. With the onset of the pandemic, digital payments have shifted from a nice-to-have to an essential service, and hence we have seen accelerated adoption.
The government is pressing on with the Digital India initiative and has made strides into Tier 4 and 5 cities and tapped into new sectors for digitisation – agri tech, health tech. Payments is an important pillar and it is heartening to see payments move from remittances and retail to cross sectoral usage.
Post-COVID, we will not see the demise of cash, but its relevance will definitely decline. It’s time to think about the role payments could play in the ecosystem of today and tomorrow.
What is the impact of COVID-19 on your business?
COVID-19 has fundamentally changed the way we think about the future. One profound change is the dramatic acceleration from physical to digital. There has always been a distinct secular trend towards digital payments, but the current environment has rapidly accelerated that movement.
Our products and services have never been more needed and more relevant. We’ve worked hard in recent years to establish ourselves as one of the world’s most trusted digital payments brands, with substantial reach and scale for both consumers and merchants. And those efforts are clearly paying off.
Another interesting trend seen is increased adoption by what we call the ‘Silver Tech’ generation — people in the age group of 50-70 years. Our merchants and our consumers want us to expand our products and services, and we will not let this opportunity pass us by.
What is your focus on risk and security? How do you eliminate payments fraud?
As adoption of digital payments has increased, there is evidence that online crime and scams are increasing as bad actors exploit vulnerabilities to their advantage. On any regular day, we do north of about 33 million transactions in a day [globally], and any given second is more than $22,000 in payment volume itself, and through this we learn a lot about the spending patterns of customers, their behaviours, what location they’re in, the right kind of implicit and explicit authentication and so on.
All the technical work around cybersecurity and risk management need to translate into tangible and practical end-user benefits. Here, we have implemented easy to understand ‘Buyer and Seller Protection’ policies, which protect both merchants and consumers across various scenarios as they buy and sell online.
How has the company performed in the Indian market since entry?
We entered India with an objective to offer a safe and seamless digital payment experience with a focus on enabling MSMEs and the freelancer community. Our global presence, wide acceptance, and focus on risk and security, make us a preferred partner for these merchants.
The brunt of the pandemic has been felt by the small and medium businesses. As they look to adopt a digital approach to survive, we are a valuable partner for them. Our cross-border business helps these merchants sell to a global consumer base and thereby recover faster.
We have best-in-class partnerships to give these small businesses access to an omni-channel approach and to engage consumers across their touch points.
What are the challenges and opportunities in India?
India is a key growth market for us. It is home to 6.33 crore MSMEs, out of which 6.30 crore — 99.4% — are micro-enterprises. The number of MSMEs in FY20 has increased by 18.5% to 25.13 lakh units from 21.21 lakh in FY19. Our cross-border business enables these merchants to sell across the globe to our 300 million consumer base.
India is unique. The regulator and government are at the forefront of driving digital adoption. Over the years, the government has brought a great approach to enable growth of this ecosystem. With initiatives like UPI, India Stack, Aadhaar, India’s digital payments journey is poised to take off unlike other countries.
Offline payments are just another welcome move to ensure financial services are democratised across India. This clubbed with digital literacy in COVID times is bound to enhance financial inclusion, leading to increased volumes in online payments.
One of the biggest challenges in India continues to be cash. With the pandemic, we have seen a significant shift to digital; but to sustain this growth, it is critical to manage risks associated with payments. We have a two-sided network which protects both merchants and consumers.
Another challenge is the need for Internet penetration to tier 3 and 4 markets, which will enable deeper penetration of digital payments.