Google Pay, PhonePe And Others To Join RBI’s Digital Currency Pilot

Major fintech giants such as Google Pay, PhonePe, Cred, Mobikwik and AmazonPay are now opting to join the Indian central bank’s digital currency pilot, as per Reuters’ report.

Sources told the news agency that the companies will be doing this by offering transactions through e-rupee. 

It is pertinent to note that the Reserve Bank of India (RBI) started its digital currency pilot in December 2022. 

Initially, only the central bank was allowed to offer e-rupee via their mobile applications. However, following RBI’s directive in April this year, fintechs were also allowed to offer e-rupee transactions after its approval.

Following this, the fintech startups were reported to be seeking more clarity from the central bank on the rules of engagement with banks to deploy central bank digital currency (CBDC) use cases. 

The Reuters’ report further outlined that these fintech are working closely with the RBI, National Payment Corporation of India (NPCI), and the domestic payment authority and are expected to launch access to the e-rupee over the next three to four months. 

The report added that digital currency transactions have declined sharply to 1-2 Lakh transactions a day from registering over 1 Mn transactions a day last year. 

Alongside this, the other source told Reuters that the central bank has no immediate plans to do a full-scale launch of the digital currency. 

The developments come at a time when banks are reportedly engaging with various fintech startups at various levels to deploy use cases for retail CBDCs.

Notably, two major use cases are being tested in the first phase of the CBDC retail pilot for NBPSOs. While the first one includes subsidy payments for farm inputs, the second use case is around corporate expense management.

It is these use cases that the banks are currently working to deploy and they will now also work closely with fintech startups to fuel the CBDC pilot.

In April, RBI deputy governor T Rabi Sankar said that 2.2 Cr transactions have been processed since the launch of the central bank digital currency (CBDC) pilot in December 2022.

Sankar said 46 Lakh users and 4 Lakh merchants were currently transacting in CBDC, adding that the transaction volumes were shifting from P2P (peer-to-peer) to P2M (peer-to-merchants) owing to the availability of more merchants accepting the Digital Rupee.

The CBDCs are a tokenised digital version of the Rupee issued by RBI. It leverages distributed-ledger technology (DLT) and has been envisaged as a digital alternative to physical cash.

Since its launch in 2022, the CBDC pilot currently caters to the wholesale and retail segments with more and more banks making a beeline to join the trial run.

In a bid to shore up the adoption of CBDCs in the country, the central bank, in February this year, announced additional functionalities such as offline capability and programmability for CBDC retail payments.