2 Startups Begin Test Phase Of New Retail Payment Products Under RBI’s Regulatory Sandbox

Over a year after the Reserve Bank Of India set up a regulatory sandbox for fintech startups to boost innovation, two entities have begun testing offline epayment facility for remote locations in the country.

Jaipur-based Natural Support Consultancy Services and Delhi-based Nucleus Software Exports have begun testing their payments solutions under the framework, the central bank announced on Tuesday. 

Natural Support Consultancy Services’ product ‘eRupaya’ is a set of Near-Field Communication (NFC)-based prepaid card and NFC-enabled Point of Sale (PoS) device to facilitate offline Person-to-Merchant (P2M) transactions and offline digital payments in remote locations, according to RBI.

The offline digital cash product, ‘PaySe’, of Nucleus Software Exports will help connect with rural areas for epayments, RBI revealed.

The product proposes to help in digitisation of payments in rural areas, starting with Self Help Groups (SHG), through an offline payment solution and a digitised SHG-centred ecosystem, it added. The RBI said it received applications from 32 entities of which six have been selected for the ‘Test Phase’.

The regulatory sandbox allows the regulator, innovators, financial service providers (as potential deployers of the technology) and customers (as final users) to conduct field tests to collect evidence on the benefits of new financial innovations while carefully monitoring and containing their risks.

In August 2019, the RBI had released the framework for its regulatory sandbox whereby a set of companies would be allowed to develop and test their products under limited regulatory controls and supervision. 

Announcing the framework, RBI had said that no legal waivers will be given to the sandbox companies and companies will also be held liable for any consumer losses that might be incurred during the testing period. “Liability for customer or business risks shall be passed on to the companies entering the RS, ” the framework document added.

Further, RBI has also mandated companies to have insurance cover and a minimum net worth of INR 25 Lakh, among other criteria, to be accepted for testing under the regulatory sandbox (RS). 

According to a report by the government think tank, Niti Aayog titled, Digital Payments – Trends, Issues and Opportunities, the digital payment industry is expected to reach $1 Tn by 2023.