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If you thought India didn’t already have enough payment methods—credit cards, debit cards, wallets, Unified Payments Interface (UPI), Immediate Payment System (IMPS), National Electronic Fund Transfer (NEFT), buy now pay later—be ready for more in the coming years.

The Reserve Bank of India (RBI) in February sent out guidelines calling for more entities to create, manage, and operate new retail payment systems. That means the quasi payments regulatory body, the National Payments Corporation of India (NPCI), is set to have more rivals.

NPCI was set up in 2011 to grow retail payments in India, and it did just that. It looks after most retail payments, from ATMs to IMPS to UPI, among others. Before NPCI, Visa and Mastercard managed India’s ATM network and promoted card payments. NPCI’s entry expanded payments; digital payments have grown grown Times of India Digital payments soar manifold in 5 years Read more by 55.1% over the last five years.

But among the 900 million Indians who are banked, only 100-150 million are unique users of digital payments, according to industry estimates. Only 18% of consumption is paid for digitally.

“Till we are able to increase the spend to 50% and at least 50% of the population, we need more entities to expand the market,” says Navin Surya, the chairman emeritus of the Payments Council of India (PCI), a lobby group.

Besides growing the market, RBI felt a rival to NPCI is needed to keep the organisation in check. After all, NPCI is in charge of a payments hydra like UPI that does two billion transactions a month, much more than any other payments system.

So, RBI proposed forming New Umbrella Entities (NUE) as a method to keep NPCI in check.

The central bank isn’t allowing an individual entity to apply to become an NUE. It wants groups of companies to form consortiums, with the promoter holding no more than 40% of the entity, which gradually needs to be pared down to 25%.

Those in the industry expect no more than two to three entities getting an NUE licence. But like with any licence that RBI gives out, there has been a lot of interest.

Surya’s company So Hum Bharat Digital Ltd is among the first aspiring NUE consortiums, with Yes Bank, and digital payments provider Infibeam Avenues as partners. Surya is expected to announce more partners for So Hum over the next few weeks.

No other company has publicly announced its intention to apply for an NUE licence, but there are factions taking shape. The deadline to apply is 26 February 2021, when interested consortiums are also expected to submit their business plans for RBI’s approval. RBI is expected to then give an in-principle nod later in 2021.

It’s only in 2022 when any new payments system can be expected to launch.


Arundhati Ramanathan

Arundhati is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She writes the newsletter Ka-Ching! every Thursday. She lives in Bengaluru and has spent 14 years reporting and writing on various subjects.

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