Creating bandwidth key for transition to digital payments, say panellists at VCCircle event
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Creating enough bandwidth and providing incentives to merchants and consumers can help push the government’s drive to get rid of black money and facilitate the transition from cash to digital payments, said panellists at News Corp VCCircle Payment Summit 2017.

Participating in a discussion on ‘Creating a hybrid and integrated model of payments: Collaboration of government, startups, banks and service providers’, Abhishek Awadhiya, head of industry - telecom and digital payments at Google India, said, “Going by the huge push for the digital payments, by 2025, digital will overtake cash.”

Dhananjay Tambe, chief general manager at State Bank of India, said after the government launched the demonitisation drive in November last year, there was a surge in digital transactions but it returned to pre-November levels by April after adequate cash got added in the system.

“The common man wants to go digital but a major chunk of merchants is still reluctant. Also, we don't have enough mechanism or bandwidth to cater to the requirements of all customers and this needs to be changed,” said Tambe adding that, “To help people migrate to digital payments, the government needs to stipulate that payments for water and electricity in addition to municipal tax should be made through online only.”

According to Harshil Mathur, co-founder and CEO of Razorpay, the sector will see a major growth since traditional finance companies like banks are willing to work with fin-tech startups as they realise that such a collaboration is a win-win for both.

“Banks are traditional lenders and are being governed under strict regulations which make them trustworthy. Startups are more agile and nimble and can embrace changes faster and that makes the alliance meaningful,” said Mathur.

As the sector sees definitive growth, investors are becoming more bullish on the space on a long-term basis. “We are excited about the fact that India is at ground zero in terms of fin-tech activities,” said Rahul Chandra, managing director of venture capital fund Helion Advisors. “Paytm has got a payment bank licence and its valuation has surged to over $6 billion. These developments make the sector interesting for investors,” Chandra added.

Speaking on new technologies such as API banking, blockchain and artificial intelligence, Krishna Vinjamuri, principal, Lightbox Ventures said around 60% of the investments in fin-tech firms is attracted by the bitcoin segment.

Though transactions using blockchain have increased in India, there are only a few companies that trade in bitcoins using e-wallets, said Sujatha Mohan, head of digital and new initiatives, RBL Bank. Bitcoins are also used as an alternative investment option like gold as they are universally accepted, she said.

In the immediate future, banks should be in a position to use data science and machine learning to their advantage as they have recorded data on customer interaction across transaction, expense, bill payment, among others, over 25 years,” said Ravishankar, co-founder and CEO, Active Intelligence Pte Ltd.

Virender Bisht, co-founder and CTO, NiYO Solutions Inc, said startups are better placed to provide enhanced customer services. However, infrastructure needs to be opened up to help them do it, he added.

*This article has been updated to correct the second name of the RBL Bank executive.

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