Money & Banking

Umbrella entity for retail payments could see robust response

Surabhi Mumbai | Updated on August 20, 2020

The proposed pan-India umbrella entity for retail payments on the lines of the National Payments Corporation of India could see robust response with the payments industry seeing it as a positive development.

According to industry estimates, close to a dozen players could put in applications to the Reserve Bank of India for setting up such entities, although it is still early days to formulate a full strategy.

The RBI had, on August 18, released the framework for the umbrella entity for retail payments and invited applications by February 26, 2021.

The framework aims to help entities set-up, manage and operate new payment systems in the retail space through means such as ATMs, White Label PoS; Aadhaar-based payments and remittance services; newer payment methods, standards and technologies; and also operate clearing and settlement systems for participating banks and non-banks.

Contactless payments

Players in the payments industry point out that it comes at a time when digital payments are seeing strong traction due to the focus on contactless payments.

“The framework for the retail umbrella entity is a very positive move, and looks very favourable to support the industry. There are only a few minor tweaks from the draft norms. It is a perfect opportunity for any payments player to participate,” said Naveen Surya, Chairman, Fintech Convergence Council.

“I am seriously considering this opportunity and to make positive impact like I did with formation of ItzCash and Payment Council of India,” he further told BusinessLine.

Mobikwik said it is also evaluating the guidelines. “It is an interesting opportunity, especially given the size and scale of our consumer and merchant business, along with the fact that MobiKwik is one of the few payment system operators that is Indian-owned and controlled,” said Upasana Taku, co-founder and COO, Mobikwik.

“Opening up the payments system to private participants will democratise payments and increase the velocity, competition and innovation in digital payments. It will reduce systemic risk with lower reliance on NPCI and card networks. Players will be able to better address the needs of industries and build more vertical solutions. Decoupling of payments from a bank led model, as was the case in UPI and mobile wallets to a certain extent, will further encourage participation,” she further said.

Sandeep Jhunjhunwala, Partner, Nangia Andersen, pointed out that retail payment business has been a fast-developing sector and it will be interesting to witness the creation of a new framework that could be the backbone of digital businesses in the future.

Noting that NPCI has done a lot of path breaking innovations in the sector, Anand Kumar Bajaj, Founder MD and CEO of PayNearby, said: “It opens up opportunities for fresh thinking with co-creation as a theme with other three pillars of finance – insurance, lending and investments. Such wide gaps would need collaboration at very high level, and another organisation of NPCI stature can help speed up the possibilities.”

Published on August 20, 2020

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