Players Looking To Compete With NPCI Worry About Interoperability

SUMMARY

Earlier this year, RBI has released a framework to appoint a new NPCI-like entity for retail payment systems

State Bank of India, Reliance Jio Infocomm and the Tata Group are looking to compete with NPCI

A top public sector banker in this domain had previously said that RBI won’t issue more than two licenses

Indian companies and startups are queuing to apply for new umbrella entity (NUE) licences, which will allow them to set up their own pan-India retail payment network. However, the companies sending in their plans are still looking for answers before sending in their proposals.

Currently, this domain is monopolised by the state-run National Payments Corporation of India (NPCI), which manages IMPS and UPI payments systems. The companies, which are looking to send their proposals, are currently unclear whether there will be interoperability between their solution and the system operated by NPCI. Many have also written to the Reserve Bank of India (RBI), seeking access to NPCI’s solutions like the UPI.

Though RBI has ensured them of interoperability, it hasn’t commented on full interoperability, according to an ET report, citing sources. Some applicants are also fearful that the system could give partial access to UPI in some form, while others have raised concerns over the brewing tussle between NPCI and the NUE system.

State Bank of India (SBI), Reliance Jio Infocomm and the Tata Group are looking to create their network in this domain as well. Both Jio and SBI are the foremost contenders in the race to get license, and are in advanced talks to forge individual alliances to take this project forward. Interestingly, SBI is also a shareholder in the NPCI.

Meanwhile, Tata Group has initiated talks with RBI and is on the lookout for potential partners before forming its plan. Tata Capital and Tata Consultancy Services are expected to take a lead role in this project, which is a part of Tata digital’s plan to launch a SuperApp.

The NPCI was set up by the RBI and the Indian Banks Association (IBA) in 2008 as a non-profit entity. Its offerings include UPI, NFS, Aadhar-enabled Payment System and IMPS. On the contrary, the NUE can be ‘for profit’.

A top public sector banker in this domain had previously told ET that RBI won’t issue more than two licenses. The RBI has said that the new entity must have owners or promoters with at least three years of experience in the payments ecosystem.

Foreign investment will be allowed subject to existing guidelines and approval, the RBI added, while the central bank’s fit and proper guidelines for promoters would apply for the NUE as well.