As India proposed for an unified cross border payment framework across member countries during the 18th BRICS Summit, Vijay Shekhar Sharma, founder and chief executive officer of One97 Communications and its consumer brand Paytm said that India is now in a position to handheld other countries to develop such a payment system. In an exclusive interview with the TNIE, Sharma said India is also in a position to import the technology to other countries too. Excerpts from the interview
BRICS is proposing a cross-border unified payment system. Can the BRICS bloc replicate India’s UPI model, and what are the biggest challenges to implementing a unified cross-border payment mechanism?
India being the pioneer (in unified payment system), we can handle other countries. I think the best thing is that up till now India has been the market for the global technology and with the payment and financial services and the AI, I can say that India will see the world as a market for our technology.
And this is clearly something that has changed in the last 10 years. The capabilities and the systems that we built in this country are now not just world-class, but are of a scale which is dramatically bigger than many other systems that exist. The cost and the scale and the capability are phenomenal.
And it started from financial services and fintech and I can tell you the same is happening in AI. I was talking to a lot of people in different, different countries and since morning in different meetings and the kind of capabilities in AI that we as Paytm have delivered, I was like, we never thought that the world will be a market for our AI at a scale like no other. So, I see this as an opportunity for us, more like what we built, how can we disseminate or take this to the world? And places like BRICS, places where you're meeting the really the second set of the large economies in the world.
This is the middle order of the world, as you can say. I'd say that being an Indian, instead of being a third world, today definitely sounds like that we are definitely going way ahead of the third world that we've been labelled as.
BRICS also proposed trade in local currencies. But if we look at the Rupee-Rubel trade, the banking system remained a challenge. How can Indian fintech address such banking hurdles arising during cross-border payment or local currencies payment ?
One of the most important things in the cross-border payment system is who's the hub and spoke model. So, when you fly out of India, you either have a direct flight, bilateral or you go through a hub. Typically, global money transfer happens through a hub. There is somebody in between and that is where the world gets a little bit tough, delayed or cost of the systems come in the way.
But the capabilities of India are now that we can directly and bilaterally connect with any country whatsoever. So, the very fact that you're quoting is an example of it that we do not need another hub now. We've got our aircraft that can fly that far, equivalent of that if you will.
And equivalent that would be that we got our technologies that are able and capable and the systems trust and capability up to a level that another country in another part of the world can directly connect with us. So, countries used to take time to connect to a hub. Now, India's capability and size deserves to be bilateral and potentially a future hub.
Given that international UPI transactions faced sluggish initial uptake before rebounding to a certain extent until very recently, what structural or regulatory friction existed at launch, and which barriers have now been successfully dismantled? And how can those changes be incorporated when we think of unified payment among BRICS Nations ?
When you say India has launched UPI, you've launched capability that India's UPI apps can make a payment outside. And this is about that country's merchant base where we as Indians, are going and making a payment. So, it will always remain small. If you notice what I'm trying to bring up is that we are not the local payment player there. We are our customers doing a roaming connection.
It's equivalent to saying you take your India's mobile phone and it works locally there. So, the number of people that fly, the number of people that pay and number of merchants that we are going to pay is something that will slowly evolve and the number of people that we are going outside India will increase. So, when we launch our payment system elsewhere, we are actually launching an interconnect between their payment and our system.
And this actually is how it will be. Slowly, steadily, growing, compoundingly, people understanding, merchant understanding and so on. But not only the Indian tourists, can we expect in some year or can we aim that that will be a part of their payment ecosystem also? They have their own telecom operator. We have our telecom operator. We have our own QR network. They have their own QR network.
We are not launching their QR network. We are interconnecting that our customers can pay on their QR. So, the growth is how many people from here are going, how many people want to use this payment option.
We only connect. It's like saying India's telecom network is now interconnected with let's say another country and that it is not growing. But how many Indians are going there? How many Indians are actually using mobile from India? So, all those things are there.
Understand that the nuance here is not about whether this is small or large. It is about the ability to carry your own equivalent of a phone, meaning your app and you can make a payment. I see Paytm being used in so many countries.
Which simply means that merchants in those countries can take payment using Paytm app. That is what the trick is. And it continues to grow.
And as you can guess now, if you understood that it is not related to that, international has not grown. India's traffic to that country, those who are willing to make payment using mobile phones and the merchants acceptance of that country of their own.
