How technology powers India's digital payments industry


Collective Effort, Open Approach and Deep Partnerships are crucial to achieving scale: Rahul Chari, Co-founder & CTO, PhonePe

The digital payments revolution has transformed our lives and societies with unprecedented speed and scale, delivering immense opportunities as well as daunting challenges. The rapid user adoption has increased the demands on technology for speed, reliability, and privacy. And while companies in the digital payments space are working toward providing a seamless experience to their customers, PhonePe has been ahead of the curve.

In this edition of the PhonePe Pulse Beat of Progress conversation series, Chandra from CNBC TV18 caught up with Rahul Chari, Co-Founder & CTO, Phonepe on how technology has been and will continue to be a game changer for the industry. Here is an excerpt from the conversation:

Built for billion from day one:

Talking about the guiding principles that supported tech decisions on the design and architecture of the platform, Rahul explained how PhonePe was built for a billion-population scale from day one. He said, “An over-engineering approach was deployed to build our core stacks, payment stacks, accounting, risk and fraud stacks where we were building for millions of transactions to be conducted on our platform on a daily basis”. He further added that the phenomenal pace of UPI’s growth does not offer the luxury of time, thus a robust future provisioning approach is essential.

As the Indian digital payments market is set to touch US$10 TN by 2026, Rahul emphasized that a collective effort, an open approach, and a deeper partnership model within the ecosystem will be key to backing this growth. He highlightedcthat Pulse is an extension of PhonePe’s open platformcapproach with the view of democratizing access to digital payments data for the benefit of other stakeholders in the ecosystem.

PhonePe’s digital infrastructure:

PhonePe has built well-entrenched infrastructure systems that enable large volumes of transactions daily.Based on a cost-effective CAPEX model, Rahul explained how they have prudently chosen to own data centres vis-à-vis hosting on a public cloud that has helped synchronize and control operational efficiencies end-to-end.The infrastructure has been built to scale, backed by more than 200,000 cores of computing power, and manages nearly 10 Petabytes of storage capacity. To support the explosive growth, PhonePe has deeply invested in powerful servers enabled by alternative cooling methods such as Liquid Immersive Cooling (LIC) and Direct Contact Liquid Cooling (DCLC) instead of the typical air-cooled servers. He further elaborated that technology plays a crucial role in ensuring a seamless customer experience. Sharing that 92% of customer tickets generated are resolved through tech in the first go, he also highlighted that PhonePe’s systems are built on a preventive approach. A prime example of preventive approach is the Kill Switch mechanism. Kill Switch has been devised based on predictive logic with the ability to respond within 3 to 4 milliseconds to avoid payment anomalies. A judicious mix of a user-friendly interface, preventive approach, guidance mechanisms, and automation have ensured that the app is able to cater to a diverse diaspora of 1 BN users across the country.

Exciting times ahead for the digital payments industry:

Rahul opined that ONDC (Open Network for Digital Commerce) is set to challenge and give a makeover to local and hyperlocal commerce. Besides ONDC, he shared that the Account Aggregators (AA) will open flow-based credits which will provide impetus to MSME markets and B2B businesses while the Digital rupee will accord traceability and efficiency to money management. In addition to the opportunities, he also spotlighted the need for making the Fintech ecosystem sustainable so that the players in the ecosystem can invest significantly to drive further growth. He believes that while policies have been progressive, they need to be designed with a dual purpose of augmenting efforts and at the same time being restrictive of malpractices. Concluding on an enthusiastic note, Rahul shared that players need to be cognizant of the governance, regulation, and institute evolved risk management practices to achieve the ambitious scale of US$10 TN.
Watch the full video of the conversationhere