Biggest fintech disruption will be the linking of credit cards to UPI, says Shailendra in BOB Financial Solutions

Credit card spending penetration is growing across categories and geographies. And Unified Payment Interface (UPI), though seen as a competition, will soon become an enabler, I believe Shailendra Singhmanaging director and managing director i BOR Financial solutionsin an interview with MintGenie.

He also highlights the usefulness of digital wallets and rapidly developing methods of credit card transactions such as tap-n-pay and Google Pay.

According to him, the biggest disruption will be the linking of credit cards to UPI. He also explains about the transaction monitoring algorithm for fraud detection. He also shares some tips to prevent the occurrence of credit card related fraud.

While sharing his thoughts on the fintech ecosystem in India, he claims that the scale and spread of digital payments increased during the pandemic.

Edited excerpts:

Can you tell us about the acceptability of Bank of Baroda credit card among retail customers?

Bank of Baroda (BoB) credit cards are among the most preferred credit cards among retail customers today. Acceptance of our credit cards has increased significantly in recent years as BOB Financial Solutions Limited (BFSL) has continued to invest in people, processes and technology.

We offer credit cards that are on par with the best in the industry and are offered to a wide range of retail customers, beyond the obvious segments of multi-card residents in metros and mini-metros.

BFSL has ensured that they offer credit cards with features and benefits that are relevant to customers at a particular stage of life or based on specific spending needs.

With increasing reliance on UPI and mobile wallet services, do you think the credit card business has suffered or is likely to suffer in the near future?

The growth in credit card spending indicates consumer confidence both in the Indian economy (post-pandemic) and in digital transactions.

The dominance of e-commerce transactions and penetration of credit card spending across categories and geographies bodes well in the immediate and medium term. UPI, mostly seen as competition, especially for small ticket purchases, will soon become an enabler, as more issuers enable RuPay credit cards on their UPI. Hopefully RBI also allows other networks to run on the UPI rails for credit card transactions.

While digital wallets may have been an easier method of making payments, the industry is rapidly evolving with newer methods of credit card transactions such as Tap-n-Pay and Google Pay.

However, the biggest disruption will be the linking of credit cards (CC) to UPI. Although it may affect the form factor, the use of credit cards will only increase and perhaps at the expense of digital wallets as the issues related to loading costs and end use are not known, will not apply to CC-UPI transactions.

Often customers complain about fraud committed on their credit card accounts. There have been cases where people have lost a lot of money through no fault of their own. What data security and fraud prevention measures does Bank of Baroda have to prevent such incidents?

This is where BoB Kredittkort has a clear advantage over many of the other products on the market. The trusted and reliable brand of Bank of Baroda assures customers that their interests will never be compromised even in the unlikely scenario of loss of money on their card.

Apart from the regulatory validations on 2FA, we have also implemented Falcon, a state-of-the-art transaction monitoring algorithm for fraud detection, which monitors transactions in real-time and alerts us to transactions that are uncharacteristic of past customer behavior. In addition, we have data security protocols including cloud server management to ensure that customer data confidentiality is not breached at all.

Do you have any advice for credit card customers regarding the use of cards to ensure they are not exposed to fraud?

It is said that there is no such thing as over caution. Some of the suggested advice to avoid fraudulent transactions are:

• Verify the antecedents of any person who calls you a representative of a bank.

• Never share any OTP with anyone over the phone or download any untrusted applications on your desktop or mobile device as these are all trained to scrape private data from your devices.

• Do not hand over your mobile devices to strangers under the pretense of helping them make calls or check other apps.

• Never store your card details on any website and always prefer to buy online from apps or portals that are trusted or secured.

Fraudsters are trying to institutionalize this industry and it would only take the collective efforts of all vigilant citizens to help banks and financial institutions combat their nefarious intentions.

What do you think about the fintech ecosystem in India in terms of consumer dependence on credit cards and digital payment system?

Fintechs have been an integral part and the main reason behind the rapid adoption of digital payments in India. We all know the names of major fintech players who disrupted the digital payments space, mostly with the help of the Unified Payments Interface (UPI). The 2016 demonetisation exercise gave momentum to this adoption, especially on the acceptance side.

The scale and proliferation of digital payments came as a gift during the pandemic, as a digital payment and acceptance infrastructure was already in place for no/low-touch interactions.

Credit card customers also found newer reasons and opportunities to use their credit cards, forced in part by the pandemic, and were exposed to the ever-evolving and improving customer experience facilitated by fintech. Today, as the fintech system matures, both existing and new players are working on newer business cases that will further improve the customer experience during digital transactions.

While Buy Now Pay Later (BNPL) and Credit Card As A Service (CCAAS) are some of the buzzwords, linking credit cards (RuPay, for starters) with UPI is the next big thing in the digital payments space, which is seeing a lot action in the fintech ecosystem. The customer experience is set for a makeover, and customers using any mode of digital payments, including credit cards, are set to gain the most.

What are your views on Budget 2023 from the perspective of a credit card company executive?

The budget provides an enormous boost towards economic growth. It has balanced the demands of both rural and urban populations. The budget has allocated additional funds for various lending programs that will have a direct impact on the overall credit landscape, enabling the country to grow further.

The credit card industry is very optimistic about the future growth with the impetus given towards digitization and formalization of the economy.

The Amrit kaal Budget will help the industry to underwrite better and consequently provide sharp risk-based pricing that ultimately benefits the customer.

The formalization also helps more customers towards the formal banking channels, and they in turn benefit from the opportunity to borrow through formal channels.

Digital payments from 2018 to 2022