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Uttam Nayak

Group Country Manager – India & South Asia | 02 Nov 2012

People even in the remotest parts of the country are using e-commerce to make bill payments like airline tickets and shop online. The number of e-commerce transactions is growing two to three times that of face-to-face transactions. Internet is here to stay, it is everywhere and is creating a new mindset. Visa looks to empower this – our motto is ‘Visa everywhere you want to be’ and with the internet, there’s no place on this planet now where you can’t use a Visa card.

As Group Country Manager for South Asia, Uttam Nayak leads Visa’s operations in India, Sri Lanka, Bangladesh and Nepal. During his 15 years at Visa, he has successfully launched various innovative products designed and developed to meet the unique needs of consumers in the debit, credit, prepaid and commercial cards space. He is also responsible for successfully developing platforms such as Visa Money Transfer, Visa Bill Pay and establishing Visa’s online and mobile products in the region. Over the years, Nayak has held several key positions at Visa and has expanded Visa’s business into key geographies in South Asia. Prior to Visa, he had worked with the US Department of Energy and US-based PhoneTel.

In conversation with Noor Fathima Warsia and Shanta Saikia, Nayak speaks at length about the growth of the debit card business in India, challenges in adopting the e-commerce model, a ‘less cash’ economy and more…

Q. Visa has been optimistic on the e-commerce growth in India as we can also see in your recent advertising. What is the company’s view on how e-commerce is picking up in India, especially in the Tier II and Tier III markets?

India is a country with people across socio-economic segments and everybody has to do buying or reach out to make payments. Today, they either pay by cash or they need to rush to an ATM to withdraw cash or swipe a card at a point of sale terminal – all of these options are limited in supply. In a country our size, point of sale terminals are touching just a lakh of ATMs and are there in only seven to eight cities. For anybody who had to make a payment, the internet became a big possibility. 150 million people access the internet and more people access it from their mobile phones than on a PC and with no cost terminals around – e-commerce suddenly became an opportunity for debit card holders. We want to allow any form of payment and in essence democratise payment.

This is one area where you can really see the transformation happening in India. The Government is making sure that every village by 2015-16 has access to the internet through fibre-optic broadband. People even in the remotest parts of the country are using e-commerce to make bill payments like airline tickets and shop online. The number of e-commerce transactions is growing two to three times that of face-to-face transactions. Internet is here to stay, it is everywhere and is creating a new mindset. Visa looks to empower this – our motto is ‘Visa everywhere you want to be’ and with the internet, there’s no place on this planet now where you can’t use a Visa card.

Q. When do you think the mindset of trusting the internet and paying over the web will become common place amongst Indians?

The process began in about 2003-04 and I actually credit the low-cost airlines that had begun operations then for it. The primary goal was to make air travel as low cost as possible and to do this it kept its overheads low with only a handful of offices, few employees and no agents. Ticket bookings were done over the phone by the call centre where the Visa card numbers were taken from the consumers. When it was found that the volumes were not going up as desired from the call centre, the airline decided to take the bookings on to the internet and that’s when the real inflexion point came from our perspective of payment.

Today, airline booking is the largest segment. After airlines took off, IRCTC too joined the bandwagon for train ticket booking. So the travel industry starting off with low-cost airlines, then train bookings with IRCTC and then with Red Bus coming in around 2007-08 – that actually is the single biggest reason for trust. People were compelled to use the card convenience to book tickets as there were no other options and the fear and the resistance just broke down. Around the same time we introduced the second factor authentication called ‘Verified by Visa’ globally and India was among the first countries to adopt it - all these led to that shift happening.

Q. What has been the experience of focussing on the Tier II and Tier III markets?

If you see the way the payments industry has evolved, we started off with credit cards that were mainly for discretionary buying. Then we moved on from credit to debit cards and it took off in a big way – there are 300 million debit cards in the country and they largely came from government banks, which have a footprint of distribution of 80,000-plus branches and a majority of them are in Tier II and Tier III towns. They gave people debit cards and a limited footprint of ATMs and actually called it an ATM card. We told them that it can’t be called an ATM card because the true power of the debit card comes at the points of sale and do a cashless, electronic payment transaction.

We realised very quickly that while we were promoting migration to point of sale, the penetration of points of sale in Tier II and Tier III towns was not going up because people who are deploying point of sale terminals are with the foreign and private sector banks that were focusing on the Tier I cities. Tier I cities have ATMs and point of sale terminals, but Tier II and Tier III cities where the issuance is happening with the government-owned banks, there was no acceptance happening at all. That’s where the bulk of our customers are coming from. And if we really had to get them to see and recognise the benefit of electronic payments, it was not starting off from the ATM point of sale and then sale on the internet, it was the other way round. For majority of the customers in those towns, the first experience of an electronic payment is straightway on the internet. Thus, we have customers who are transacting for the first time on the internet and not at the ATM, that’s a learning curve. This we are seeing happening more with the youth TG and that is what we think will transform India because if you want cash-less – well, you can’t have a completely cash-free economy, but if you want less cash in the economy – it is only through making the internet happen.

Q. What are some of the factors that you think will drive that for us to see its advantages?

The whole country is being wired by mobile phones and internet. A less cash economy means less corruption in the economy, so I think it is very important that we ride this internet wave. Every one of our 150 million-plus card holders in the country has access to the internet, we just have to get in there and remove his fear or resistance to using it for the first time, and if you do that, you will transform. We will see more e-commerce transactions happening maybe five years or 10 years down the line. There was a time there were more credit card transactions than debit card transactions, today if you look at the RBI’s published figures, India is now officially a debit card country because more than 50 per cent of the transactions happening in the country are on debit cards. We are not a credit card company, we are a payments company, if you want to classify us with one particular product, please call us a debit card company in this country. And in debit cards, the faster growing channel is the e-commerce channel, so that is the direction we are going.

Q. Your recent communication brings that out very well indeed. Visa was once very high on advertising on platforms such as cricket, but you have changed that approach quite a bit now…

We have been doing different things. From 1996 to about 2000, cricket was a big platform and we were establishing our brand and our lead product into the country at the time, which was credit cards. We sponsored the 1996 Cricket World Cup and then identified Sachin Tendulkar as the brand’s face. In 2000 when debit came in, we did our commercials around that. The first set was what we called the ‘Grandma commercial’. Subsequently, we worked with Javed Jaffrey and Arshad Warsi and then Vinay Pathak last year. We have taken a leadership role in promoting the debit card category in the country. All through this last decade, every year we have run usage and activation campaigns which might not be television-led, but are all below-the-line such as using the print and digital media or bank-led communication. We have invested significantly all these years to drive the debit card category. And then e-commerce came in 2004, but it took some time to get established. From 2009 onwards, we have focussed a lot on e-commerce across our communication.

There would be changes in approach as the market and we evolve, but to put it simply, India stands out as a priority market for Visa. It is tasked with making the best out of the resources available in the country and I think we are in a very good place. India will be a stand-out country in terms of debit card performance for Visa.

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