Instant Payments A New Way to Pay

[Music] good afternoon your excellencies ladies and gentlemen uh we've got a great panel today actually and you've all been part of very impressive projects that have spearheaded initiatives we were just talking about t+ three how it's come to t+ one and now look at us we're at instant payment so very fast progression and I think it'd be really good just for you to introduce yourself introduce some of the numbers let's talk transaction volume let's talk geographies and uh we'll go down the line so uh Med do you want to start first yeah good afternoon everyone so I'm bu CEO of BU Manas and uh bua for those who know it already it's uh mainly a a platform for processing payment across the Arab region but not only so our last participant is Master Card joining from New York uh that uh is about number 120 of financial institution joining bua to use a wide range of services among which inent payments so the topic of today uh transaction volumes are still uh low for the time being but with a consistent and uh uh good growth of about 15% from one month to another so we are getting in the thousands per day per month and increasing further over the upcoming month hopefully fantastic yeah over me good afternoon um thank you for having us it's lovely so my name isan pauer and I work for ephat payments we are the National payments company of the UAE we are relatively new uh we have been in existence for 18 months and it's uh a year ago when we launched uh the instant payments platform for the UAE it's called Ani which means instant in Arabic I was told um and uh as M mentioned I think with every payments platform having uh the network and the reach is the most important thing so we don't have 180 financial institutions but within a year we onboarded more than 60 financial institutions in the UAE we have over over one and a qu million people registered and as of today I think we are doing uh over 400,000 transactions a day so I see a beautiful growth of the platform and it has been kind of in a stealth mode for the last year but I think at the end of this week there will be a massive marketing campaign and hopefully everybody will start uh seeing Annie you know uh out there and um their financial institution is likely ready to enable those payments so we will see hopefully even more growth in the coming months so you heard it here first by the end of the week and he will be everywhere um Rach let's go to you hello everyone uh I represent uh National payment Corporation of India we run and operate uh unified payment interface or UPI uh it's a about 8y old platform uh 7 to 8 years old uh we are today uh processing about uh 15 to 16 billion transactions a month so about half a billion a day and uh as per some reports that's about 50% of the instant payments that are processed globally uh just to uh uh you know highlight the value that it's creating out of these 15 to 16 billion transactions a month 60% are Merchant payments so that shows how instant payments have uh kind of percolated to every nook and corner of the country and that's very important for a country like us 1.4 billion plus people so it's uh instant payment if you see in India is formalizing economy from uh informal sector to formalizing because and more and more small businesses accept payments the there's better tax compliance there is uh you know better access to uh credit and micr finance so UPI is doing that in India on the user side we have about 400 million users who are using uh UPI every time I say this yeah yeah I get upset with my numbers but uh anyway you say that so coolly 400 million yeah so so if you if you can simply say UPI has truly democratized payments in India and the value that is it is creating is immense and uh I think I think uh we are today looking at being the third largest economy in the world and and UPI and the larger digital public infra DPI or or as it's called India stack has a big role to play in this so thank you and let's he a bit of a different question on your side electronic money Association um January is a is a big month for Europe when it comes to instant payments with the regulation adoption what sort of numbers there do you think we'll be seeing right so um maybe a little bit of context so we've had we have local schemes some of them might be instant in different EU member states um and then we have sepa ins which is the instant payments and that's been growing steadily since no since November 2017 and now stands at around 20% of all sepa payments uh so we've got three things we've got local schemes that people use then we've got crossborder schemes within the EU and then and out of those 20% are instant what the what the legislation does in January is it says to all the banks and all the payment service providers that do payments in Euro you have to also offer sepa inst an instant version of the sepa credit transfer which currently has to be settled by the next day you have to offer it to all of your customers and you have to offer it for the same price so that's that's if you're like the big bang and it'll be interesting to see what happens and we're going to come on to things like pricing and uh and and Banks later on but um good to know for January what we're up against um Rach I just want to come back to you because those numbers they need to be uh discussed a bit more I think um when UPI was launched it was designed for an ease of use and interoperability as you said uh and now it's expanding the technology worldwide is this a new Adoption of payment rails do you think so when you uh look at UPI in India I think we have we've become a dominant uh payment form and uh it's uh truly displacing cash you know a lot of people uh say other things but I think it's all about displacing cash because if you look at credit cards I think they're also growing but they're growing at a at a a slower Pace than UPI uh now given uh it has become a habit for most Indians uh in terms of making the payment so for for merchant payments it's QR based static and dynamic for personal payments it's phone number or alas uh and it's dominant now given the position it enjoys in the in the in the market uh it's natural for us to to to to kind of Take It Outside India so today we are live in seven markets uh and uh uh we are looking at creating wider footprint for UPI uh and this is to serve the the the growing aspirations of of Indians today uh this year I think about 30 to 35 million people will travel outside India as per a report by McKenzie about 90 million million will travel every year uh uh in 20140 so the number is going to going to increase radically now to serve the needs of these people you know it's important that we create a global footprint and here uh we are uh working on on both Merchant payments as well as P2P in P2P uh we are already live with Singapore and we are going live with another country in a week or couple of weeks we're also discussing with Yan uh how we can bring Yani Ani and UPI together and create a lot of value for ecosystem in India as well as in UAE we are also talking to European Central Bank uh for connecting tips with UPI so there are various discussions that are happening today for P2P movement and we get about $125 billion in terms of remittances every year and we send about 25 to $ 35 billion every year outside India so we are trying to bring some efficiency in that space and it's also a stated agenda for G20 World Bank and Central Bank Reserve Bank in India is Bank of India so that's one area the other is Merchant payments that's where uh you know we are looking at partnering with uh with with players in the market that are of relevance to us uh QR based uh and uh we are uh in some markets where there is QR already deployed we are making changes to read the existing QRS so that our users without any friction can read the QR are in pay and in some markets we are also working with the local acquirers to deploy our QR so that people get that kind of experience so that's what we are pursuing and uh every Market is unique but having said that uh you know we are a technology driven organization and we are happy to do most of heavy lifting to be able to reach early uh go to market and and create convenience for our users really nice uh summary there definitely um medy I just want to touch on bu now you've expanded your reaches quite significantly from the beginning um but on instant payments have you seen any misconceptions or has it been embraced yeah indeed so but I have one specificity maybe compared to my colleagues is that we are uh only exclusively in the crossborder space so we don't process any uh National flows but we deal only with payment across different countries or different regions which position us well to uh compare different practices and different situation when it comes to instant payment yes there there are certain misconception the main one and the most difficult one is on the definition of instant payment itself so what instant payment means and in certain cases uh then the saying that we should try to process payment as fast as possible as fast as possible is not enough to be instant so it's a instant payment is about making the funds available to the final beneficiary and to make them immediately able to uh to to be used by the finance man to say differently it's as efficient as cash we need to make it as efficient as cash so there is no time gap between the time at which you are supposed to get the money and the time at which you effectively get the money so that time Gap today is a a source of a lot of risks so the the the gap between these two timings it means risk for the the the beneficiary and also for the ordering party and that is a source of huge amount of frictions additional cost that are totally removed by the inent payment so these M assumptions make the whole value of inent payment Vanishing if it is not fixed properly it is even more difficult to achieve in the crossb space because the challenges of making it instant are much more difficult of course than in the domestic space and this is where where bua has a role to play across all these different jurisdictions it's it's a nice segue actually to come uh to to tear because the fraud angle of instant payments is something um that especially the UK and Europe are doubling down on in some of um their regulatory uh next steps can you explain a little bit about the different approaches that are currently utilized and what's working okay so um maybe we start off with why instant payments are a good idea so it means that if you're a merchant you got liquidity straight away if you're a consumer you want to make a payment to maybe a service provider in your home a plumber or a car Carpenter you can do it straight away if you want to send money to your son or daughter you can do it right away so lots of good things about instant payments but then it also becomes a a an attractive Target for fraudsters so for example um if I can convince you to send money uh to to me under some kind of false pretenses then under then it happens instantly and then I can take it out instantly or I can transfer it to multiple accounts instantly so what we found is with the adoption of instant payments the rate of fraud has gone up as well and in particular a kind of fraud that we call authorized push payments in other words the person who's making the payment authorizes it it's not somebody who breaks into your account and takes away the money it's things like CEO fraud if you're familiar with that or romance scams um um two days ago we had a new recruit to our company and today he sent yesterday he sent me an email and said um I've just bought you the Amazon gift cards that you asked me to buy and I said what and so he had an email pretending to be from me second day he joined the company asking him to buy Amazon gift cards and to send them to to an email address and he thought they were genuine so anyway an example so that kind of fraud is risen quite steeply and as a result of that The Regulators are asking the payment service providers to underwrite that fraud essentially to reimburse customers for the cost of that fraud this is uh this has three problems it motivates the consumer to be less careful it motivates the criminal to find Targets that are easy pickings because as soon as they succumb to the fraud they give they get their money back and then they become a Target again and it motivates the payment service provider to slow down the transaction to make friction around it to make because they have to check they want to be double sure that it's a genuine transaction so these are the kinds of problems I did hear that LinkedIn updates are something that people look for so they control I my thoughts exactly I think that's exactly what happened thank you um well I think this all essentially comes down to infrastructure then and Yan this is I guess where you come in um I know alleta had payments the UAE are taking big steps in kind of how to build this from the ground upward so why does Annie and other Solutions feel different to the rest yeah I I've had the pleasure to actually work on two other National instant Payment Solutions in the past um so I think now I have a third opportunity to get it right so we'll see we'll see how it goes but now you gave me an idea you called it Yanni which is kind of you know Yan and Yanni I've never had a payment system called after my name so maybe that's something I have to talk to the marketing department um but joking aside I think the technology has evolved so much that when it comes from the infrastructure side it's very easy to build the platform which has massive throughput uh you know can cover multiple participants you can use apis to connect to it so it's not something I think technology is not something which makes uh instant payments platforms unique anymore so what we have focused on with Annie was more the business aspects kind of thinking about the customer and specific National requirements uh which are necessary for a market like UAE so there are basically three things I think which make uh Ani quite uh quite unique and something we are proud of one is something we call inclusivity so many of the national payments uh platform and instant payments platform they still deal mainly with the traditional incumbents Banks Ani of course is a platform which can be used by Banks but it can be also used by any other licensed financial institution so in the UAE The Regulators started issuing you know other licenses uh which allow uh institutions to hold funds um and basically Ani doesn't discriminate so if you have a traditional bank account you can connect it as a source of funds to Ani if you have a wallet with one of the you know uh non-traditional players you can connect it to honey and what's probably most revolutionary many people in the UAE they actually use something called salary card that's how the salaries are distributed so even if you have just a salary card you can still use it as a source of funds uh and make transactions on on any so that's kind of covering the payer side or the issuer side the second area where I think we were quite um adventurers and um uh we believe that that's necessary to increase adoption is the acceptance side so many instant payments platform they start as a person toperson remittance kind of uh platform which limits the growth a little bit we were not scared in the UAE to actually launch any with QR codes into the point of sale so uh we work with all major acquirers so on the traditional terminals you know at uh adnoc and everywhere else you can now pay with any but also for some of the smaller players they can just uh print a QR code and put a sticker on their on their small shop and start accepting digital payments for very low cost so kind of making sure that where wherever you go an is there for you to make a payment that was the second uh I think revolutionary and quite important area for us and the third one is and you talked about it is the fraud right so you mentioned that uh having a payment process as soon as possible is not good enough it needs to be instant which gives very little time for the financial instit tions to make a decision if something is a genuine or a potentially fraudulent payment and because of the authorized credit push payments for the infrastructure and for the players it actually looks like a genuine payment so that's where you need to become a quite creative and that's another thing we are working with our friends from npci having platforms which can be you know based on machine learning Ai and help the financial institutions to make a decision if a payment in real time should go through or should be should be stopped so those are I think some of the three biggest things which make any unique from my point of view there's a bit of a dance that needs to be done here uh to get this kind of payment Harmony in Balance shall we say with the the FIS the merchants and then the consumers as well I would love to hear from all of you we can come down the line as to how what you think needs to be done to make this dance work and everyone be in harmony together uh medy yeah happy to start with this one because there are two di mentions I think to the questions you refer to the armony across the value chain or different actors in the in the payment chain there is another dimension that is more relevant for Buon which is the harmony across border meaning across different jurisdictions might me more difficult to achieve once again uh going back to the point of made by Yan earlier it is not a question of Technology anymore technology can achieve a lot and rather easily nowadays uh from time to time you have uh the debate with my team to what extent we should publish make public our design document of this system so some of them argue that we should not because otherwise we'll be copied U no I'm very happy I'm very open to that um uh we we can share all our technical document there is no risk that we are will be copied because of that what we are bringing is our ability to uh put around the same table different type of actors from different jurisdictions commercial Banks central banks other type of regulators finex other type of provider and to try to build consensus across these diverse Community this is real value added that we bring and that cannot be copied overnight so we are rather uh relaxed with with this with this challenge your question on instant payment uh I think it helps a lot it helps a lot in the direction of achieving this harmony because it's maybe one of the unique occasion where we see the adoption of the same or almost the same payment instrument at Global level and that in parallel to the adoption of the new standard for messaging which is the iso 2022 also at Global level so we see a trends of more regions and more jurisdictions aligning on standard and that over time will help a lot in maybe not achieving but getting closer to a Harmony bringing it all together yeah yeah you know I'm a payments geek I love payments but uh I think we need to recognize that nobody wants to think about payments right we are making payment because we want to make a commercial transaction so I think Harmony will be achieved only when the payments are completely ubiquitous and invisible I think we have a long way to go as instant payments platforms when you think about it globally harmonized Payment Solutions are only the you know the international card schemes and they have a bit of a head start they have been around for a few decades I think we are getting better when it comes to instant payments on the national level um so we are seeing more Harmony the inclusiveness I was talking about that it doesn't matter which financial institution you um you are a customer of you have access to the same uh to the same payment solution I think on the international level that's still uh uh a relatively long way uh away um hopefully not decades uh we will be able to catch up but uh the harmony is still not there when it comes to the instant payments and there will be all the components medy was talking about uh which need to harmonize to to achieve it so I think uh it's important to notice uh or or probably start from where it all started as an organization we are committed to digital public good and what it means is that we are driven by cash displacement we are driven by Financial inclusion and with this purpose in mind you know you're looking at adding more users on one axis and you're looking at adding more use cases on the other axis now how do you create these experiences which are simple which are adaptable and which also Inspire confidence in in Safety and Security so so to to deliver this on X and Y AIS we collaborate intensely and we collaborate uh with the banks with the finex uh we have a very Progressive regulator our Reserve Bank of India so we get a lot of guidance from them uh and and we are also enabling National agenda so there's a lot of sponsorship from the government of the country as well and and all these components you know beautifully come together to to kind of deliver what we deliver in India now having said that when you look at uh you know Partnerships outside the boundaries of the country we are looking at uh you know bilateral as well as multilateral models so we are partnering with Nexus uh project Nexus uh which is a five five central banks are part of it we are also exploring possibilities with bua and we are directly working with some countries like UA which are of strategic importance to India so India UA relation relationships are of supreme importance so we are also exploring by connection so we are you know pursuing different strategies like I said we are a very very uh Tech heavy organization we call ourselves as a technology company uh and we do payments incidentally so so we are I think we are uh you know we are flexible we are agile we are you know open to exploring different possibilities and in a short span of time I think four years if you can say we are live in seven markets we'll be live in many more in in few few years to come so I think it's it's it's it's a it's a good experience like Yan said things are not standardized but having said that you know if everything is built domestically in an organic manner there will be some level of uh you know data massaging that will be required when you connect different ecosystems but I think we we have developed enough and more Art and Science to kind of figure that out um I'd love to know have you had problems with fraud has fraud been a specific problem when you've gone to kind of in because of the instant nature of payments or is it just uh a background issu similar to other problems so I think it'll be unfair to assume where there is money there is fraud fraud occurs in cards fraud occurs in cash because that's the nature of the beast but for us our fraud to sales ratios are way better than cards okay uh couple of things I think there is a very very strong uh safety protocol that is instituted when you participate in UPI so you can only participate from the registered mobile number with the bank and uh every time you change your sim card or your phone you have to redo the whole process and the secondly every time you transact you have to put the pin uh so it's second Factor even if it's face to face it's second Factor authenticated so we have created some of these processes which are pretty robust in nature and uh you mentioned about some I I would use the word soft frauds where people are gullible or greedy so we invest in lot of awareness and education that you don't have to do this you don't have to do that so we do a lot of these above the line initiatives hiring celebrities and conveying to them to the consumers at large that these are things you shouldn't be doing and these are things you should be doing so so a lot of work goes on in that those areas hope you don't mind me asking it's I'm very interested but to answer your question very briefly um I think the infrastructure side of things and the consumer Focus side of things PSPs are good at whether they're traditional or fintex the difficulty that we're having right now is in uh on the fraud side um and it's particularly because the fraud is not in the doain in the payments domain it's in the social domain and that the challenge is somehow to solve the problem in the social domain to reduce the impact in the payments the payments is almost like the Fulfillment part of a much bigger crime and and that's a challenge we could do a whole new conversation on that next year let's do it thank you so much gentlemen um thank you everyone thank oh [Music]