‘Need coordinated data regulation in a connected world’

In what ways do you see India’s digital stack evolving?

A good way to start is by looking at some of the unique factors around India, the most populous country in the world. So, traditional solutions have not reached enough people in the country. With the launch of the India Tech Stack, the public sector has stepped in, with the Government of India saying that ‘to unlock the full potential of 1.4 billion people, we need to reach everybody and pull them into a digital ecosystem’. So, the public sector lays the tracks and then you invite the private sector to innovate up on that. Look at Paytm, Google Pay, and the banks and everybody else bringing in solutions to use that public infrastructure. So, what is there to learn is that public-private partnership does make sense because the state can lay the tracks, which has happened here.

Would you like to partner with RuPay to expand to the emerging economies?

We are open to all kinds of partnerships. We partner with government payment systems in many parts of the world. Take a look at Europe, in my home country in Germany, and a whole range of examples around the world. India is a tremendous market and RuPay is growing. So are we. So, who knows what will happen in the future.

A few years ago, Mastercard and some other firms ran into Reserve Bank of India (RBI) concerns about data localisation. Now, the new data protection act allows data to be stored in ‘trusted countries’. Yet, a few homegrown firms are again insisting on local storage. What are Mastercard’s views on data localization?

We believe that when it comes to regulation, it’s important in a globally connected world that there is coordinated regulation. If every country does their own, you get an archipelago world, and a global digital connected economy is going to be very difficult to run. In a globally connected world, if you have closed markets, then that’s not in line with what the World Trade Organisation ruled many years ago. Principles of fair competition and a level-playing field are important. We worry about bad regulation but, we engage actively.

If a country like India does insist at some point in time that data should be localized, would that be bad regulation?

In a globally connected world, if everybody stores their data locally, it’s very hard to drive cross-border trade. But we will be compliant with the data localization laws. Five years ago, this wouldn’t have been bad regulation, but it would have been very hard for us to do 10 years ago because technology wasn’t as far along as it is today. Today, you can carve up. Think about LEGO blocks. If out of our 10 LEGO blocks, three must be in India, today, we can do that, but five years ago would have been very hard. When India says ‘the data needs to be local’, then it is local. So, that’s exactly what we have done. As Indian citizens travel abroad or foreigners come here, obviously, you have some data exchange around that, but Indian data is only in India. We’ve done that.

A lot of hype around artificial intelligence (AI), especially since ChatGPT was launched. How is Mastercard using AI and Generative AI?

We’ve been using AI and machine learning (ML) for 10 years. AI is more like electricity for us. It is like an enabling technology. So, where do we use ML and AI? How do you think we keep 125 billion transactions safe? Humans can’t do that. It’s just too much volume. So, we’ve invested for years in AI and ML technology with a main focus on cybersecurity for our customers. Over the last five years, we saved about $30 billion in fraud for the overall ecosystem—the payment ecosystem—through our AI and ML capabilities. ChatGPT has driven public interest. There’s a lot of hype on it and interest. Now, Generative AI is not quite at the electricity stage yet, but we’re going to get there. Personalization will be an aspect. So, for example, what precedes a payment transaction like if somebody buys an airline ticket is personalization. So, what we want to do is provide more value to our customers before the payment transaction. So, we have bought a company, Dynamic Yield based out of Israel. So, they make sure that a digital marketing offering goes to the right channel at the right time to the right person with the right content, which then hopefully triggers interest which is good for our customers, and then it triggers a payment as they avail that offer and then it will be good for us. But around Gen AI, you have to consider the aspect of transparency and there should not be any integrity bias. Responsible AI is important because I think it has the potential to freak people out. Deep fakes and the like are things that people worry about.

Can you talk about Mastercard’s partnership approach with Indian fintech firms?

Three years ago, we invested in Pine Labs. What Pine Labs does, was going beyond simple payment acceptance. We regularly invest in our whole set of companies that offer something for us to learn but also it works both ways. If we come in, we’re a strategic investor and if you’re a founder and you have a Mastercard to your cap table, yeah that works both ways. We never do this really to own these companies. We do this to partner, they get to scale, and then at some point in time, we step out as they do the next funding rounds and so forth. So, we have a very active engagement with the fintech community. When you look around, the whole space of Neo Banks — which all started as startups — we have somewhere around 70% of the Neo Banks globally as our customers because we are there from the first day on. In the end, we’re a network. We have to invite others to innovate on our network and tap into the creativity of all these developers.

What can we expect from Mastercard in India over the next 2-3 years?

You will see us active in areas of the economy other than the mainstream payments. So, farming is one. So, what does Mastercard have to do with farming? We do because we have something called Farm Pass. So, Farm Pass is a digital platform that we’re very good at, that provides transparency on go-to-market on the pricing for your produce at this particular point in time. Enabling small and micro businesses is another. Then there is a bunch of innovation from a B2B company that our customers will see, but you (consumers) will not see. There will be the latest trends on the consumer-facing side. There is so much going on in voice commerce, social commerce, and all that will be enabled. We always look at least five years ahead on what the consumer trends are. A rising trend we see in our consumers is sustainable consumption, particularly among youngsters, who are saying I want to deal with brands that allow me to live a more sustainable life. We enabled something called the carbon calculator.

What are Mastercard’s views on crypto?

We need to distinguish between distributed ledger technology, blockchain as the underlying technology, and cryptocurrency. We saw a crypto winter set in the free-floating cryptocurrencies. We’ve not invested in any form of cryptocurrency as such. We have just launched a Multi Token Network and this network is focused on wholesale engagements of large global wholesale banks that are trying to facilitate wholesale banking.

What keeps you awake with so much disruption?

We are in the business of cybersecurity solutions. We worry about cyber risks because we’re always a target ourselves. So, we engage a lot in keeping our own house safe. So that’s probably a top-of-the-house worry. The mindset that I have on this is, one should assume, hopefully, it never happens, when you will be penetrated (fraudsters and scammers), then how do you best react to that?

Updated: 29 Aug 2023, 11:53 PM IST