Visa is set to comply with India’s data localisation norms, and process all domestic transactions locally at the newly created data centres in Bengaluru and Mumbai, the global payment major’s group country head, India and South Asia, T R Ramachandran tells Ashwin Manikandan in an exclusive interview. Edited Excerpts:
Where does Visa stand on its data localisation commitments in India?
We work with over 200 jurisdictions across the world and in every one of these jurisdictions we need to — and always will — comply with the law of the land. We can tell you that we now have a data centre in Bengaluru and a backup centre in Mumbai. We’re going to locally process all transactions.
The RBI guidelines allow for a company to process transactions abroad but bring them back to India within 24 hours. We’ll go a step further in ensuring 100% compliance once the infrastructure is ready, which should be sooner than later.
What is your assessment of India’s payments ecosystem?
As more and more Indians consume digitally with the advent of e-commerce players, we’ll see a significant portion of their collection happen digitally. During this Diwali, leading e-commerce players delivered to almost every pin code in India. That tells us that digitisation is no more a young, urban phenomenon.
People are consuming digitally more than ever before, and mobile is the first wave of transacting digitally. The second thing I would say is that both debit and credit are growing. There are countries like Germany which are predominantly debit and others like the UK and the US which are mostly credit. In India, the introduction of two-factor authentication (2FA) by RBI has played an important role in providing that extra safety assurance for people who may have been sceptical about transacting digitally earlier.
You have in the past spoken against the government’s decision to do away with merchant discount rates on card transactions at retailers with turnover over ₹50 crore. Do you believe such a move may negatively impact the sector?
There’s been a fair amount of positive consultation with the government and industry on this issue because it’s a very nuanced one. I’d hate to simplify it into terminology that says it’s either this side or that side. There are plenty of arguments we made for both sides. And a lot of factors are to be considered.
India needs to grow digital payments. Compared with China and other emerging market peers, we are arguably lagging in terms of percentage of personal consumption expenditure done digitally. I believe the number is between 11 and 12%. China, for example, is at 55%. Therefore, a set of inducements for players is needed to invest in the space. The same has been represented by the banks to the government and I’m sure a positive solution will emerge.
RBI recently opened the window for participation in its sandbox programme. What sort of opportunities does Visa see in such collaborative exercise, especially with domestic fintechs?
The short answer is an enormous opportunity. Visa works with more than 18,000 financial institutions across the world. We do business with close to 100 financial institutions in India. We are always on the lookout for new fintech players and banks that are creating solutions for the people — be they in the prepaid space, foreign exchange, digital credentials, merchant acceptance or commercial payments.
As we are a platform business, we’ll only be as valuable as the number of players who use our platform. This is only because we don’t compete with any of them and will only enable them and be a neutral player. We have initiatives such as Fintech Fast-Track project that was extended to Asia-Pacific last year, and Visa Everywhere initiative, which is more of a global project that we have kick-started in India this November.
Unified Payments Interface has emerged as one of the fastest-growing payment solutions in the world. Do you believe it poses a threat for expansion of card-based payments in India?
Real-time payments are really something that’s igniting in many places in the world. And I have no hesitation in saying that India has probably leapfrogged many of our peers across the globe in creating world-class real-time payments architecture. Is it challenging? The short answer is no, because there are just so many opportunities for digitisation. And with India at such a nascent stage of evolution in the whole digital payments journey, you know that there is ample and more room for many players to sort of healthily participate and carve out their own respective niche.
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