Calling the National Payments Corporation of India’s (NPCI’s) proposed market cap on UPI platforms a “constraint”, Google Pay’s director of product management Sharath Bulusu said that the goal should be to allow innovation in the UPI ecosystem and not stifle it. In an interview with SOUMYARENDRA BARIK, Bulusu also spoke about the future of UPI and how it can be safeguarded from fraudulent actors, responsibility of other stakeholders in ensuring that UPI is not used on platforms like offshore betting websites, and how the market cap could be operationalised in practice. Edited excerpts:
As UPI grows in scale in the years to come, there is a concern that more fraudulent actors will join the platform. How can that be reduced?
UPI has been a massive success, but these are still very early days for it in terms of the relative size of India, size of the opportunity etc. We will see a number of first time users join the Internet who may not be as digitally savvy, so, in the next five years we will commit to the fact that the growth has to come with the responsibility of ensuring the safety of users. There are a number of different use cases of UPI and there could be a bad actor at one of these places. At Google Pay, when we are sure that someone is a bad actor we won’t be shy to block the transaction. But for times when it can’t be said for sure, we will show several prompts to users including security alerts and warnings for suspicious transactions. So, in different ways, what we’re talking about is introducing a friction step. If you think of the history of digital products, everybody talks about faster. But this is one of those cases where we say we’ll break that rule.
Beyond fraudulent transactions, we are seeing UPI being used for potentially illegal payments such as on offshore betting sites. These platforms accept payments through UPI. How can these challenges be addressed?
So the way to think about situations like that is there are two, you could almost say, different aspects of UPI. One is the fact that it is interoperable. So, let’s say this bad site is able to accept UPI payments. The various applications that enable consumers to make payments will only be able to tell whether the UPI ID at the other end is a legitimate valid UPI. But, on the other side, somebody has on-boarded them as a merchant. We built a large merchant network and we verified all of them, and I think that is the standard you should expect of everyone. Beyond a certain point, if everybody has to verify every other thing, just imagine in a network of this size, everything will slow down, because you’re constantly in the job of verifying. Also, ultimately, banks and the RBI will also have a larger role to play in it.
Do you think placing a market cap on the UPI ecosystem is a fair way to check dominance in the space? How does Google Pay view NPCI’s market cap?
This early in the development of an ecosystem, the goal should be to drive innovation, create space for it and not stifle it. As long as there is well meaning regulation that is meant for the protection of users, for creating a healthy ecosystem, the market will mature and come to a reasonable shape.
The beauty of our market is that it’s a highly competitive market. Today we see a certain number of players doing various things in UPI, payments etc. and we often think that that is it. But imagine when UPI is hundred times bigger than this. There will be many more players. So the way to think about this is to create that freedom and space, don’t stifle that. A market cap doesn’t necessarily help in (taking the product to more people beyond cities). It is a constraint.
If the market cap were to be implemented and enforced, how do you reckon that would play out in the real world? As of now, Google Pay has more than 30 per cent market share, so, will you have to deplatform users, or stop new users from joining?
These kinds of hypotheticals are difficult to answer, but one thing I would say is that the NPCI and all the other players in industry, agree that deplatforming a user is not a good thing. It will reduce their trust in the ecosystem. Users have gotten used to using UPI for a number of things starting from making bill payments to paying for transportation. The simplest way for it to work is to let UPI grow. When it grows in a competitive market, more players, including startups and big companies will enter into this business. I think that is the way to solve it, not stopping a user from accessing payments.