There is ambiguity over what is called BNPL: Juspay Technologies CEO

'The impact of tokenisation extends to the entire payment ecosystem', said Vimal Kumar

Juspay Technologies is a leader in the card-tokenisation space, and is also the first certified token-requestor in India. It recently raised $50 million in Series C funding from SoftBank Vision Fund, and $10 million from existing investors VEF and Wellington Management. Vimal Kumar, the firm’s founder and chief executive officer, spoke to Raghu Mohan. Edited excerpts:

What has been your role in the tokenisation of cards so far?

A card or token is basically a key to your bank account. It’s always good to create multiple keys, or “decentralised credentials”, like use-case-based, or merchant-specific keys. We had 100-250 million cards to be tokenised from our existing vault. They had to be moved to network-based tokens. This, we feel, is a positive move. It’s better for the network to have these, versus any individual company such as Juspay to hold that liability.

Now, the Reserve Bank of India (RBI) had issued circulars on tokenisation over 1.5 years before the latest regulation came into effect. It was during this time that we started working with the networks, which were also figuring out what the right way to do it in India was. Prior to the current tokenisation circular, the RBI had been more stringent and said that this could be implemented only with device-binding, and we were the only ones prepared for this.

Device-binding means the token should be used only from the device in which the token is created, though the RBI later relaxed this requirement. As the first certified token-requestor, we are now focused on working with the ecosystem to come up with solutions to ensure that payments via tokens are a friction-free experience for users. 

What explains the fact that tokenisation is taking time?

The impact of tokenisation extends to the entire payment ecosystem. Though a token is created by a network, it must be processed through a lot of existing payment gateways and players involved in processing all card-payment flows (like EMIs and offers), in order to be rolled out successfully.

For example, today a card number, expiry date and CVV are used as the key parameters for authentication, along with two-factor authentication. But if a token is used, another time-bound, transaction-specific, authentication parameter is required. This is required every time you fetch a token for a customer to make a payment.

To give you another example, apart from replacing cards with tokens for straightforward use-cases, there’s also an identifier that is created for a card instead of the card number for certain use-cases, like identifying duplicate usage of offer codes and risk checks. This identifier was generated by the entity that was storing the cards. Now, this has to be replaced by a global identifier generated by the network. There are multiple nuances like these that really need to be thought through across every card-payment flow and respective payment stakeholder, for each merchant.

Where does Juspay compete with payment gateways like Razorpay or PayU?

Our focus has been to fill the fundamental gaps in the market with innovative products. That’s why we are a layer on top of the payment gateways. Because we’re all in payments, there are overlaps in some places, but we are not directly competing with them. In fact, we are a neutral layer on top of all payment gateways, including the gateways of banks.

Of course, some of these companies are also trying to build a layer like ours, but we have been doing this for the last nine years. And the expertise we’ve gained and the scale at which we operate is hard to match. So, my view is that we are not competing; we are only complementing the ecosystem.

What role do you see for Juspay in the buy-now-pay-later (BNPL) space? 

There is a bit of ambiguity in what everyone calls BNPL. There are shadow banks that call a six-month EMI as BNPL, whereas some fintechs define BNPL strictly as a 15-day or 30-day pay-later line. From our perspective, we are addressing both with our credit engine. This, for us then, is a paradigm that covers all kinds of credit — short-term, like 15-day or 30-day pay-later, to the longer-tenure or what’s known as BNPL, as well as EMIs that run through six, 12 or 24 months.

Could you flesh out this segregation between BNPL and EMIs?

This kind of credit is driven by quick commerce. But groceries or food delivery intersect well with shorter-tenure BNPL — where we have providers like Lazypay, Simpl, ICICI Paylater, or Paytm Postpaid. Deliberate commerce, on the other hand, the likes of EdTech, HealthTech, home furnishings, electronics and lifestyle (where consumers like to deliberate and research) tend to be more suitable for longer-format EMIs.

The EMI space has an even larger set of players, including a host of shadow banks, fintechs, and, of course, banks. As a payment experience, the orchestrator Juspay continues to play as an all-inclusive operating system — of matching quick-versus-deliberate kinds of cart experiences to a host of BNPL and EMI providers.

We see ourselves doing this with a singular north-star metric — which is to help increase purchase conversions for our merchants, while giving them better control to them on which BNPL or EMI providers are playing with them inside their walled gardens.