After the clean-up phase in 2007-08, the credit card industry in India is now poised for growth. Today, Visa launched a mobile payments solution through its joint venture Movida. Uttam Nayak, group country manager (India & South Asia), Visa, in an interview with Parnika Sokhi, says the company is focusing on the cashless transactions space. Edited excerpts:
How is the credit card industry in India shaping up?
India's credit card industry had earlier seen rapid growth. The number of credit cards climbed from a few million to 27 million cards in a span of five-six years. As a result, some people got a number of cards. In 2007, people realised they were issuing many cards, but there was no activation. So, inactive cards became a challenge for the industry. Also, a segment of the customers defaulted. According to Reserve Bank of India data, 10 million accounts were closed. These included inactive and bad customers. The focus was on giving value service to good customers. Then, we saw the launch of cards with additional features and discounts. That led to consolidation of spends. In 2007, the expenditure per credit card was Rs 15,000 a year, while now, it is almost Rs 50,000. Clearly, there is a secular shift from cash to cashless transactions. With the help of credit bureaus, customer selection has now become easier and risk management has improved. The credit card industry in India is poised to grow. In fact, the last six months have been the brightest in the last six years, in terms of new issuances and spend category.
How have you customised the mobile payment product to meet the preferences of Indian customers?
Most mobile payment solutions are designed to work on a certain type of handsets and certain telecom carriers and applications. Globally, such services are available on smart phones. In India, there are 800 million mobile customers and hundreds of different types of handsets. So, our first step was to eliminate all the problems pointed out by customers who used mobile payment solutions.
Our solution uses the existing infrastructure of cards and mobile networks. So, Movida is in talks with various people who want to replace cash transactions.
Who are your target customers?
The original target is the 280 million credit, debit and prepaid card holders, who are underutilising their cards. So, this offers another channel --- linking their phones to their card accounts.
Given the slow pace of growth, how challenging is to create an entire ecosystem of retailers and customers on the mobile payments platform?
We continue to sign more and more merchants. Right now, we have tied up with telecom companies for mobile top-ups, bill payments and movie ticketing. More merchants can be connected to the Movida platform if they believe in electronic payments. The challenge is when want only cash, and don't want to accept anything electronic.
We continue to showcase to them how their business and volumes would rise when they start accepting electronic payments. We have over 30 million merchants accepting Visa. While approaching our existing partnerships, we would try to get new partners as well.
How do you plan to stay ahead of the competition, since lately, many other such solutions have been launched?
Today, we are processing as many as 20,000 transactions per second. I would consider anybody as competition when they are able to address the challenges of underutilisation of cards, growing acceptance utilisation etc. Overall, how are they going to match the security, reliability, convenience and scalability of our network? There are many new players coming and a lot of investment happening in this space. But all these issues need to be addressed.
