Infibeam Avenues Processes Retail CBDCs, ToneTag To Rollout Service Soon

Digital payments solutions startup Infibeam Avenues on Monday (January 30) said that it has processed the first batch of Central Bank Digital Currency (CBDC) transactions for online retail users. 

In a separate statement, voice-focused payments solution startup ToneTag said that it will also enable acceptance of digital rupee at its merchant outlets.

While Amazon-backed ToneTag has partnered with IDFC First Bank to roll out the offering, sources told Inc42 that Infibeam Avenues has also tied up with the same bank to process such transactions. 

The announcements come close on the heels of the Reserve Bank of India (RBI) launching a pilot for retail CBDC. 

Infibeam Avenues, through CCAvenue, claimed to have become the first payment gateway player in the country to process retail CBDC transactions. 

Speaking on the development, Infibeam Avenues MD Vishal Mehta said, “…and we are now going to process CBDC transactions for online retail payments. We are ready to share our technology with more banking partners to roll-out CBDC aggressively. We have the necessary processes and compliance in place to quickly onboard and instantly activate new merchants.”

Infibeam Avenues will leverage its merchant base to scale the service which is also expected to generate revenue opportunities for the company. 

The development comes a few months after Infibeam Avenue received aggregator licence and a perpetual licence to operate as Bharat Bill Payment Operating Unit (BBPOU) from the RBI. 

Speaking on the partnership with IDFC First Bank for retail CBDC transactions, ToneTag cofounder and CEO Kumar Abhishek said, “In this pilot, ToneTag will provide solutions through which merchants will be enabled to accept digital currency. With this launch India becomes one of the only few countries globally to take this leap of digitalising cash and reap its great potential to reduce counterparty credit and liquidity concerns, as well as increase the efficiency of payments and securities settlement…” 

The CBDC Leap

On November 1 last year, the RBI commenced the first pilot of wholesale segment-targeted digital rupee in a bid to strengthen the local digital payments ecosystem. 

The central bank is largely aiming to reduce the INR 32 Lakh Cr cash in circulation, promote financial inclusion and innovation, and save on operational costs related with managing cash through the CBDC. 

So far, the RBI has identified nine banks – State Bank of India, ICICI Bank, Yes Bank, IDFC First Bank, Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank – to run the wholesale pilot. 

After the wholesale trial, the central bank also rolled out the retail pilot of the digital currency on December 1, 2022. 

The trial run will enable the RBI to test the architecture and efficacy of its ambitious project. 

Earlier this month, RBI Governor Shaktikanta said that CBDCs could emerge as a prospective area of greater cooperation among South Asian economies.

The introduction of CBDC is also seen as a measure by the RBI to reduce the attractiveness of private cryptocurrencies. While the central bank has been a staunch opponent of cryptocurrencies, the government hasn’t made its stand clear on them. However, the Centre has been pushing for global regulation for cryptocurrencies.