The Reserve Bank of India (RBI) guidelines which are going to prohibit online merchants, payment aggregators and payment gateways from storing customers’ card details is bound to disrupt the digital payments ecosystem. Tokenisation (replacement of actual card details with an alternate code called ‘token’) is the next high-tech thing to happen in next five to six months in the payments segment of fin-tech space. Pune-based startup PhiCommerce is one of the few players in the Asian continent that are ready to roll out an end-to-end tokenisation solution.
Founded in March 2015 by Jose Thattil, Tushar Shankar, Anil Sharma, Rajesh Londhe and Ramkumar Subbaraj, PhiCommerce is a new-age financial technology company that addresses evolving needs of digital payments infrastructure. Its payments processing platform PayPhi enables businesses to embrace the digital payments ecosystem with smart interventions to automate, integrate and streamline payment transactions across an omni-channel and instrument-agnostic platform.
In the beginning
After completing his BE Electronics from Mumbai University, Jose went to the Narsee Monjee Institute of Management Studies and completed his Masters in Management Studies in 1997. Says Jose, “I started my career with ICICI Bank. I was AVP Technology at the organisation and responsible for launching India’s first VISA Debit Card. That was my first real exposure to payments. What I realised then is that payments are going to be a requirement through all sectors in India. That’s when I decided to focus on digital payments as a career.”
Jose moved to a Pune-based company named ElectraCard Services. He was one of the founding members of the company which was one of the earliest software product companies in digital payments. That’s how Jose’s association with Pune began.
“We built payment solutions and deployed them for very large banks and institutions – both on payment acceptance and issuance side. Acceptance side operations were ecommerce, point of sale (POS), m-commerce, ATMs, Kiosks etc, while issuance side operations were to build and roll out very large debit card programmes, credit card programmes, wallets and other facilities. We did this in India and 22 countries across the globe,” Jose said.
“As part of that 15-year journey, we were able to see how payments was evolving in countries like North America, Africa, Middle East, South Asia and South East Asia region. We realised it was not just peculiar to India, but globally also there was a lot of action happening in the digital payments space. In 2013, ElectraCard was acquired by Mastercard,” he said.
In 2015, Jose along with Tushar, Anil, Rajesh and Ramkumar, decided to quit their jobs and start PhiCommerce. Jose is the chief executive officer, while Rajesh heads the payments business and Ani heads the soon-to-be-launched credit business. Tushar heads the sales and business development across both these business units while Ram is the chief technology officer. Says Jose, “I have known them for about 15 years and we have worked together. We are virtually a family. Each one of us have our own strengths or core areas/skillsets.”
“In 2015, we were focussed on product development. In the early part of 2016, we were aware that digital payments are undergoing a revolution. There were three basic philosophies under which we started PhiCommerce,” says Jose.
Omni-channel and instrument agnostic platform
Says Jose, “For last 40-50 years, the payments space was largely led by card-based payments. However, in the last 5 to 7 years new payment methods originated. QR, mobile-based/wallet-based payments, biometric payments, IoT based payments started coming in. Most payment processing platforms globally were designed for a card-first transaction. To handle these newer payment instruments, there was a lot of programming and coding done on top of these card-based platforms. But it made these platforms lose the nimble nature. It was like getting patched on a core platform. If you build on top of a legacy stack then you will lose the benefits.”
“In payments world, there are two basic concepts – Push or Pull payments. So, you should have a platform that can do both PUSH and PULL. You should have a platform that can process cards, or QR codes, or biometric or ECS type of transaction – all with the same ease. And you should be able to do online (ecommerce) platform or an instore platform or a doorstep platform. The whole world is now moving to an online-to-offline-to-online scenario. If you have different platforms or solutions to handle these channels, it is not going to work. As a business, there is increasing premium in having a singular view of your customer, and not having siloed systems. We realised that the world really requires a complete rethink on a payment processing stack. And we need to have a technology or platform that you would throw any sort of payment at it, it will be able to process. Thus, we decided to make PayPhi omni-channel instrument agnostic,” Jose said.
Built in India and deployable anywhere in the world
Commenting on the RBI and central government stance regarding payments data, Jose says, “Globally, lot of central banks and government are becoming very possessive about their payments data. Central banks and governments are insisting that payment infrastructure needs to reside on their soil. The data should not go out of the country. Which means that thinking from a payment processing stack perspective, it has to be ‘passport-able’ to any part of the world. Whatever be the application you develop, has to be such that it can be actually shipped out to a different location to be installed there very easily.”
“Large payment processers globally had developed large and fragmented platforms which made it extremely difficult to replicate or deploy them it in any other part of the world. We came from a product background. We realised that anything that we do has to be largely productised with a view of deploying in any part of world at short notice.”
Largely use-case driven approach to payments
Jose has a “controversial” view about payments. Contrary to certain people who view payments as a commodity – involving only a debit and credit or a sender and receiver – Jose and his team believes that each industry has its own nuances of payments. He says, “The moment you treat payments as a commodity then the payment platform only takes care of the debit and the credit. As a result, whole lot of processes around it get manually done. For example, originating a payment, invoicing a payment, collecting payment, distributing payment at the backend, all of this is then manually done, since from a payment processors perspective you will be only responsible for the debit and credit. Whereas we believe that it is not so.”
Jose also gives an example of an ecommerce marketplace transaction. “An e-commerce marketplace is expected to collect money from a consumer. Now that money doesn’t end with the marketplace. The marketplace then has to pass on a large portion of it to the sellers at the backend, to various logistics providers. This splitting between various service providers and sellers at the backend, is also according to us a part and parcel of the payment transaction. You cannot say that the payment ends with money having coming into the marketplace as account. What happens to the onward distribution of funds? So, we believe that there could a core that is common but every industry will have a certain requirement of some subtle nuances around payments. That is where we set about designing various APIs drive functionalities to cater to various large industries. Once we went live, we work with very large merchants across the country. We are present across all channels, all instruments in the country,” Jose says.
Demonetisation and Covid influence
Since its inception, PhiCommerce has witnessed three major developments which has pro
pelled it growth. Demonetisation (2016), Covid-19 outbreak and the subsequent lockdown (2020-21) and the rise of direct to consumers (D2C) brands.
Says Jose, “Demonetisation was a wake-up call for country emphasising that the shift from cash to digital has to happen. A lot of transactions, across industries, got converted from cash to digital almost immediately. But Covid-19 has forced people to adopt digital as a way of life. Cash-On-Delivery (COD) has converted to ‘Digital Payment On Delivery’.”
Sharing his experience while working with one of their biggest client – a government-owned gas company – Jose said, “We see transactions coming from very rural distant places. People are making Aadhaar-based transactions for their LPG gas cylinders. These are people who have probably done their first digital transaction in their life. Now they have adopted to that. The pandemic has taught us that there is no going away from digital payments.”