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'Build like a startup, govern like a bank’: PhonePe's Sameer Nigam's tip to fintechs

'Build like a startup, govern like a bank’: PhonePe's Sameer Nigam's tip to fintechs

PhonePe, one of the pioneers in India’s digital payments ecosystem, is on track to meet the RBI’s card tokenization deadline. While speaking at an industry event, its founder Sameer Nigam said regulation is welcome.

Following RBI’s guideline Sameer Nigam-led PhonePe was one of the first payments operators that started tokenisation back in December 2021. Following RBI’s guideline Sameer Nigam-led PhonePe was one of the first payments operators that started tokenisation back in December 2021.

Fintechs and banks are strange bedfellows. Neither can they do without one another nor are they at peace at all times. Amidst several ongoing narratives surrounding fintech regulation in India—from card tokenisation to UPI charges to MDR and more—the founder of a digital payments pioneer has batted for optimum regulation.

While speaking at the Global Fintech Fest (GFF), Sameer Nigam, Founder and CEO, PhonePe, shared, “What we always tell our young engineers is build like a startup, govern like a bank. If you flip it, you are dead. But this is not to say that we’re inviting more regulation."

Elaborating further, Nigam, whose fintech startup is the largest digital payments player in India right now, said, “Regulation is welcome. We are better off being regulated from the get-go, when somebody tells you that these are the best practices to follow. We as PhonePe were regulated from Day Zero. We merged with Flipkart and had the PPI license.

“But, in India, we also have this habit of passing a new law whenever something goes wrong. I hope, as an ecosystem, we can get to a point where individuals are held accountable, instead of things becoming hard for the entire sector,” he added.

Echoing Nigam, Razorpay Co-founder and CEO Harshil Mathur said, “The public-private collaboration between NPCI and last-mile delivery met by fintechs drove outcomes both from a regulatory and industry perspective. If people don’t feel safe using the new products and services we bring out, then it’s bad for the ecosystem.

The ecosystem needs to strike a balance between innovation and regulation, even as it scales fast, reckons P Vasudevan, Chief General Manager, Department of Payment and Settlement Systems at RBI. “If fintech players want to get into an area that has no regulation, then it becomes an area for us to look at. And we come in with a framework to make it a level-playing field. That’s how regulation evolves,” he explained.

Following RBI’s guideline, PhonePe was one of the first payments operators that started tokenisation back in December 2021. These tokens are being created with all three major card networks - Visa, Mastercard and RuPay. Earlier this month, the Walmart-owned company announced that it has tokenized over 14 crore credit and debit cards, covering ~80 per cent of its active users, and is on track to meet RBI’s September 30 deadline.

PhonePe said in an earlier statement that card tokenization is a very progressive move by the RBI. Customers gain as their card details are saved only by the issuer banks and card networks, minimizing the risk of data leakage and transaction fraud. Merchants, meanwhile, can ensure safer transactions that will help them gain consumer confidence, resulting in higher transactions and growth.

Nigam summed up saying, “Digital payments are reaching a tipping point where it will become irreversible for the population at large. But payments data getting harnessed for financial services is where we should get to at some point in future.”

Also Read: PhonePe tokenises 1.4 cr debit, credit cards in line with RBI mandate

Also Read: RBI tokenisation deadline: How to tokenise your card by Sept 30