A week or so ago, other than the rather inflammatory, if not unsurprising comments about Facebook being "evil", Paytm CEO Vijay Shekhar Sharma raised some policy issues regarding governance at the National Payments Corporation of India (NPCI) that, among other things, runs the mobile payment infrastructure structure, unified payment interface (UPI).
NPCI is a bank-owned non-profit company, which Mr. Sharma claimed should be an unbiased facilitator. And, by allowing WhatsApp to use UPI under seemingly different standards than others, NPCI has broken that unwritten promise to the consumer to be a consistent facilitator for all companies.
Unified Payment Interface or UPI is an instant real-time payment system developed by NPCI for inter-bank transactions. UPI is regulated by the Reserve Bank of India (RBI). It works by instantly transferring funds between two bank accounts on a mobile platform. This is distinct from the way wallets work which take a specified amount of money from users and stores the money in the wallets own accounts. In contrast, UPI withdraws and deposits funds directly from the bank account whenever a transaction is requested.
Now leaving the commentary from the PayTM CEO about Facebook alone, the concept that the NPCI is a purveyor of pure unbiased good for the banking industry is just plain pollyannish at best and populist rhetoric at worst.
While the NPCI and it is UPI implementation has completely changed the mobile payments landscape for the better, the fact is that NPCI is 75% owned by 10 banks. They funded the majority of the founding and ongoing expenses are therefore going to make decisions that optimise their own interests. They may have structured things so that UPI is "accessible" to anyone, but in reality, the rollout has not been completely transparent. And to be fair, it's quite hard, in a highly technical area as well as a resource constrained environment, to allow everyone access at once. Practical needs will dictate access on a serial basis with some prioritisation of the access.
In theory, in an open platform, which is fair and transparent, all players get access to all features at the same time, assuming they meet certain requirements. In this case, wallets were (and still are) kept out of the UPI ecosystem and there is no timeline to allow them in. In fact, the NPCI's ex-CEO has gone on public record stating that they have made decisions for competitive reasons that exclude things like wallets, not to mention other RBI authorized payment mechanisms.
On the topic of Facebook or WhatsApp not playing fairly, that is not new either, nor unexpected. It is rare for companies with the leverage that WhatsApp or Facebook have to play completely "fairly". They are in the business of making money, and in this case that means keeping WhatsApp users in their own walled ecosystem. Why would they allow a WhatsApp user to completely change the user experience of over a billion users by suddenly asking them to login, or to allow them to transfer payments to a UPI ID rather than to another WhatsApp user?
Let us address both of these points. First, if NPCI is expected to facilitate a cashless society, it is probably a good idea to allow the hundreds of millions of WhatsApp users in India to have access to UPI through WhatsApp. Forcing the WhatsApp user to transfer money to another UPI ID, whether or not they are a WhatsApp user, is a fine thing to do, but requires some strong oversight and follow through at the NPCI end. The WhatsApp UPI user-interface makes it clear that either there was little thought given to the user experience for UPI access, or it was rushed through, or both.
On the second point of missing login and security protocols, alleged by PayTM's founder, to fundamentally change the way WhatsApp operates (in order to maintain consistency between all users) is a draconian method of enforcing a rule. The idea of allowing millions of WhatsApp users to have the ability to use UPI has clearly taken precedence. By making sure that the liability for an incorrect or fraudulent transaction to be handled by WhatsApp or the banks is the better approach, assuming it's enforced properly. The NPCI claims to have done this and there is a circular to that effect.
It is quite clear that NPCI afforded Facebook and WhatsApp a slightly different set of rules for the use and utilization of UPI than others, as Mr. Sharma was quick to point out. But in business, especially big ones, things are not always 100% fair and Mr. Sharma ostensibly knows that. The real source of his irritation was, and is more likely that suddenly millions of users have UPI access for cashless transactions that do not need to use Paytm.
Large social networks like Google and Facebook and Snapchat have a captive set of users, who they will definitely attempt to keep in their own walled gardens rather than use 3rd party payment mechanisms outside their environments. That is the real reason for the outburst.
(Jayant Kadambi is entrepreneur, technologist, and business leader who led his most recent company, YuMe, to an IPO as a global leader in digital media technology. Jayant is based in Silicon Valley and is spending his time as an advisor, board member, and angel investor.)