AI and ML boost our transaction success rates above industry average by 2-3%: Manas Mishra, CPO, PayU

In a recent interaction with Express Computer, Manas Mishra, Chief Product Officer, PayU, discusses the rapidly evolving payments industry in India and how PayU is positioned to leverage these trends. The conversation highlights key innovations, including biometric authentication through their FlashPay product, the role of AI and ML in enhancing payment security, and PayU’s commitment to supporting SMBs with tailored solutions. Mishra digs into the company’s ongoing efforts to streamline the payment experience, reduce fraud, and stay ahead of industry trends, focusing on customer-centric solutions.

How do you see the broader trends in the payments industry evolving, and how is PayU positioned to capitalise on these trends?

India’s digital payments sector has seen tremendous growth, driven by innovations like UPI, with transactions increasing from INR 220 crore to INR 18,592 crore in a decade, as per official data records. However, the industry has more potential with new technologies, collaborations, and rising customer expectations.

One notable trend we are witnessing is a shift towards multi-factor authentication, moving from OTPs to biometrics like fingerprints and facial recognition for enhanced security and user-friendliness. Additionally, AI and ML are becoming essential for improving risk management, fraud detection, and personalised services. In addition, the rise of subscription payments and reward-based systems is reshaping consumer behaviour. Solutions that allow users to pay using accumulated rewards create a more engaging payment experience while encouraging customer loyalty. Overall, these trends are paving the way for a more secure and inclusive digital payments landscape.

By constantly innovating and integrating new technologies and fostering industry partnerships, PayU continues to stay ahead, offering personalised, secure payment experiences that meet evolving customer needs and drive business growth. For example our advanced AI-powered solutions like ‘Protect Plus’, offering robust fraud detection, chargeback management, and secure international expansion for merchants. Our recently launched product ‘FlashPay’ is EVMCo-compliant plug and play solution, simplifies the payment process by replacing OTP verification with biometric authentication, using Face ID or fingerprint recognition, ensuring fast, error-free transactions. Our ‘recurring payment suite’ is aimed at enabling merchants to automate billing, improve cash flows and offer better pricing. Our ‘No-Code Downpayment EMI Solution’ for Online Retail enables customers to make a partial payment upfront while remaining can be converted into easy EMIs, making high-ticket purchases more affordable and accessible. With the integration of our ‘Pay with Rewards’, merchants can access a potential base of 350 million consumers and reap the benefits of the loyalty economy.

What specific challenges do SMBs face in the payments space, and how are PayU’s products and solutions addressing them?
Small businesses are faced with multitude of challenges right from the digitisation of their payment processes to cart abandonments, RTO (return to origin) issues, operational inefficiencies to scale, access to formal, etc. PayU recognises each of these obstacles and helps SMBs address them through its comprehensive suits of customised solutions.

For instance, through our easy plug and play solution like CommercePro stack, SMBs get access to leading features such as checkout express, data insights, offers and recommendation engine, etc., that help them with RTO mitigation, higher conversions along with post-payment journeys like customer retention and loyalty. We also offer SMBs a flexible line of credit with no hidden charges and competitive rates to support their growth. Also, to enable SMBs to provide a frictionless shopping experience to its customers, we offer solutions like WhatsApp Store integration. Also, to help SMBs with customer acquisition and retention, our Prepaid Edge PPI suite offers a suitable solution by leveraging powerful digital wallets, gift cards, corporate cards, etc.

Through all such and more innovative suite of products, we take care of financial services needs of small businesses.

PayU recently introduced FlashPay, an industry-first biometric authentication solution for card payments. Could you walk us through the development process and the key objectives behind this product?

OTP scams in the country are at an all time high. If you delve deeper in the past, OTP technology was introduced when devices lacked the capability for biometric authentication, such as fingerprint or facial recognition. However, the devices today are equipped with advanced biometric features, offering a far more secure and reliable method of authentication. Biometric authentication not only enhances security but is also quicker and less prone to errors compared to OTP, which can be time-consuming and less convenient for users.

Recognising this shift, we launched Flash Pay. This cutting-edge technology eliminates the need for traditional OTP-based authentication by leveraging fingerprint and facial recognition for swift, secure payments. Flash Pay offers a seamless payment experience, completing transactions in under 10 seconds, while also reducing risks associated with OTP delays, manual errors, and fraud from OTP sharing.

Regarding the development of the solution, we have built this on PayU’s proprietary 3DS SDK, it is designed as a simple plug-and-play solution, enabling quick and secure biometric payments. The solution is further powered by Wibmo’s proprietary Tridentity solution, for enhanced security and is well-aligned with the RBI’s draft guidelines on Additional Factor Authentication (AFA).

One of Flash Pay’s promises is to increase transaction success rates. How does biometric authentication contribute to this, and what success metrics are you aiming for?

Flash Pay solution is created to revolutionise card payments. Moving past the OTP hassles, this solution can help merchants simplify payment experiences for customers by reducing latency of each payment by about 80%. The average transaction time in an OTP-based authentication process is about 40-50 seconds which Flash Pay aims to bring down to under 10 seconds using facial or fingerprint recognition authentication. PayU also plans to extend this solution through APIs and web browser-based transactions, ensuring broader accessibility for all merchant types.

How have banks responded to Flash Pay, and what steps are being taken to ensure smooth integration and widespread adoption across banking partners?

Flash Pay has been garnering positive responses from banks, especially because of it being a modular solution. Its capability to seamlessly integrate with banks’ existing ACS (Access Control System) infrastructures, which is used for SMS OTPs, and across multiple options like merchant SDK, APIs and Bank app SDK, makes it a suitable choice for banks. Additionally, the solution’s security features such as device binding and jailbreak detection, supported by PayU’s comprehensive fraud risk management engine, enables banks to achieve greater control over customer authentication and ensure high levels of financial security and compliance. In fact, Flash Pay’s alignment with the RBI’s draft guidelines on Additional Factor Authentication (AFA) demonstrates its commitment to regulatory compliance, which further helps banks meet their obligations and avoid penalties.

We have already launched this solution in collaboration with South Indian Bank to make the issuer app biometric authentication live and pilot with the merchant app and more such integrations are in the pipeline.

What’s the next big challenge or opportunity you see for PayU in terms of product innovation? Are there any upcoming solutions that you are particularly excited about?

We view challenges as opportunities to innovate and enhance our offerings. We are always agile, refining our approach, prioritising compliance with regulatory policies to ensure a secure and seamless payment experience for merchants and customers alike. For example, multi-factor authentication, while presenting certain challenges, also offers immense potential for improving security. Embracing this, we launched Flash Pay—an industry-first solution—designed to deliver a fast, frictionless, and secure payment experience for end-customers, taking payment efficiency to the next level. Similarly, we identified an opportunity to revolutionise card payments by developing a dynamic and secure card tokenisation platform for merchants and banks. As a result, we launched PayU’s push provisioning solution in collaboration with leading industry networks like Mastercard, Visa, and RuPay. We are excited to see these two products take centre stage in the coming times.

How is PayU leveraging AI and machine learning to enhance payment solutions, fraud detection, and customer experience?

Advanced technologies like AI and ML have always been cornerstones of our innovations at PayU. We leverage these technologies right at the foundational stages of our product development, ensuring we deliver best-in-class solutions that are secure and compliant. We deploy most advanced identification and monitoring systems in the country, ensuring that only verified merchants can operate on our platform. Also, through AI, we conduct enhanced due diligence such as periodic website and partner site verifications, across all segments, particularly for the high-risk ones. We use machine learning for transaction routing to enable more efficient decision-making, leading to transaction success rates that exceed the industry average by 2-3%. Seamless integrations expedite and help our merchants onboard onto our platforms faster; in turn improving the efficiency and productivity of the complete on-boarding lifecycle.

We also leverage these technologies to analyse and simplify our customer lifecycle and experience in our credit business. From determining a consumer’s credit risk, to simplifying their onboarding journey when applying for a loan, to enhancing retention and reducing churn, and more, we depend on technologies like AI and ML. And lastly, for Wibmo, we use a combination of rule-based and ML-based systems to detect fraudulent transactions.

What is the company’s product roadmap and what are some of the innovations in the pipeline?

Enabling our merchants to continue delivering a seamless experience to their end-customers has always been at the core of our product strategy. We recently announced a slew of innovative products, some of which were developed in partnership with leading industry networks such as Mastercard. Products such as PayU Protect Plus, Prepaid Edge PPI suite, Push Provisioning, Maximizer, etc., are all designed to enable merchants to deliver a secure and seamless payments experience. We are also keen to streamline and secure cross border transactions and hence, we are currently driving pilots with Mastercard for our Subscription Multiplier and Cross Border Issuer Authentication solutions. We’ll continue to build more industry use-cases for these cutting-edge solutions and simultaneously innovate to bring leading solutions compliant with the regulatory policies to solve the needs of merchants, banks, and customers.