The hottest sector for investments, innovation and burning venture money in India aren’t e-commerce, food delivery or ride-hailing. It’s digital payments. From 671 million transactions in Nov 2016 when over 85% of India’s physical currency was summarily demonetised, the volume of digital transactions has grown to over a billion by the end of 2017. The projected market is slated to be $500 billion by 2020. Whether local or international, all the 800-pound gorillas of tech are battling it out for leadership with their own payments products—Flipkart with PhonePe, Google with Tez, Facebook with Whatsapp Payments, Amazon and Alibaba-backed Paytm*.

The Indian government itself is putting all its might behind digital payments, even spending serious taxpayer money to get more people to adopt it.

And at the epicentre of this action stands the National Payments Corporation of India (NPCI)—a creature like no other. Like a mythical god with multiple faces or avatars, it is simultaneously one thing, many things and nothing.

NPCI owns and operates all retail payments including the Unified Payments Interface (UPI), an instantaneous payment network that helps send money to people the way we send emails. UPI is a one-of-a-kind system, with no precedents. It is the rails on top of which tech companies are building their own branded payments apps.

Depending on the time and context, NPCI is a competitor. It is a platform. It is a regulator. It is an industry association. It is a profitable non-profit. It is a rule maker. It is a judge. It is a bystander.

“Beta” in Hindsight

In May 2017, we were the first to call out NPCI’s identity crisis and its potential conflicts of interest. It’s now February 2018, and NPCI’s metamorphosis is complete.

The immediate trigger is, once again, our 14 February article on Facebook’s WhatsApp getting preferential treatment by NPCI to pave the way for the launch of its payments features. And that reminder came from the founder of India’s biggest payments company—Paytm. (Editor’s note: Sharma is one of the angel investors in The Ken.)

The after-effect was immediate.

The news of WhatsApp’s business head for India Neeraj Arora quitting Paytm’s board broke the very next day (it would later emerge that he had quit earlier, over conflict of interest).


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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