NTT Data Payment Services India’s chief executive officer and whole-time director Takeo Ueno said Japan is working with India to see if UPI or unified payments interface system can be extended to the East Asian nation. The talks regarding this are at an early stage, he said, adding that India is super advanced on payments technology.
Talking about plans to look beyond the payment aggregator space, the NTT Data Payment India CEO said the company could explore inorganic options for the purpose of diversification. Speaking exclusively to Moneycontrol, he pointed out that competitive pricing is the only pain point in the local market, and explained that India could be more aggressive on pricing even compared to China. Edited excerpts:
How would you rate your experience so far in India?
NTT as an IT services company has had a very long history with India. In 2019, we acquired a company named Atom Technology and from that, we started a payments service. It’s a very fresh business, which is presently catering to B2B clients. It's for enterprises. But payments is a super retail business and it’s very exciting. But it is not easy.
Why do you say that?
India is the largest market, but the most difficult market. One is about the pricing. It's very competitive. Sometimes banks and other players offer even zero rates. It's very aggressive. In four years in the payments area in China, I have seen they are also very aggressive. But India is super aggressive.
The second is regulation. It's good. The RBI (Reserve Bank of India) is a very innovative and challenging central bank. The number of UPI transactions—(achieving) this (has been) much faster in India than Japan. Of course, India's population also comes into play. What Japan took 50 years to do, India has done in 5-10 years. It's a very drastic change we are facing.
Are you looking at increasing your investments here to grow, now that you're four years old in India’s payments business?
We have made certain investments and for three or four years we will only be focused on the top line. Till we break even and we can seek profits, we will be a bit conservative. It would be about having more sales teams or system platforms and compliance.
Where do you stand in terms of breaking even now?
We have broken even, but profits are small and the revenue is also small. Frankly speaking, the pure collection period in India is maybe 11 years and more. That is the payment space and its for the long term. It's not for short term.
Indian customers are also said to be very demanding. What’s your view on this in the payments business?
NTT was a governmental body 25-30 years ago. Japan is very conservative. They spend so much money for a very stable and secure system. NPCI (National Payments Corporation of India, which runs UPI) is thinking of taking UPI to Japan. India is a very advanced country in payments. We have a lot of areas to learn from India.
At what stage are we in terms of this discussion to take UPI to Japan?
It's quite at ground level. NTT is like a national system and NPCI and NTT Data have had very close discussions. Japan has a very long history of interbank and retail transactions. Deep integration has already been made. A new system integration is a little bit difficult, because it takes 50 years to be integrated. That is maybe what we have to learn from India and also try to optimise like India.
Would you look at diversifying into other payment options like cards and would you look at acquisitions as a strategy to expand in India?
Our technology is now focused on the merchant payment aggregator. But we wish to expand into the issuing side, like a wallet service or prepaid card service. And also, technology financing, B2B financing and loan generation. This is a new area we are trying to explore. We could do it organically or through M&As.
Are you currently exploring acquisitions on the issuing side?
We are just try to find one from the long list.
Some of the large banks are also looking for foreign collaborations and partnerships. Would that excite you?
We’ve already done collaborations on data centres and IT services. Even a public sector bank has a data centre with us. In the case of a point of sale (POS) system or payment gateway, we have collaborated with a major bank. But we don’t have tie-ups like what Hitachi has with SBI (State Bank of India). If such an opportunity comes, we’d think about it.
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