Page 34 - Banking Finance June 2022

ARTICLE

The monopoly also restricts the vision
for future growth as there is no
challenge from peers. NPCI operates
settlement systems such as UPI, AEPS,
RuPay, etc. Players in the payments
space have indicated the various pitfalls
of NPCI being the only entity managing
all of retail payments systems in India.
RBI's plan to allow other organizations
to set up umbrella entities for
payments systems aims to expand the
competitive landscape in this area. For
the players planning to establish these
NUEs, the aim is to get an even bigger
share in the digital payments sector.
The new players will come with new
innovations and technology which will
again facilitate retail payments which
will in turn benefit to the customers.

What would be the
structure?

The entity shall be a Company
incorporated in India under the
Inc. and Google and credit-card providers Visa Inc. and Companies Act, 2013 and may be a 'for-profit' or a Section
Mastercard Inc. are among those vying for unprecedented 8 Company as may be decided by it. The umbrella entity
access to India's burgeoning digital retail payments market. shall be a Company authorised by Reserve Bank of India (RBI)
The companies are part of four consortia preparing to apply under Section 4 of the PSS Act, 2007. It shall be governed
for licenses to operate retail payments and settlement by the provisions of the PSS Act and other relevant statutes
systems in the country, people familiar with the matter said. and directives, prudential regulations and other guidelines
More companies could band together before a March 31 / instructions. All entities eligible to apply as promoter /
application deadline.

In a market where cash is still king, digital payments are
quickly gaining ground as India's 1.3 billion people are
starting to embrace online shopping and services such as
online gaming and streaming. With India's Smartphone user
base approaching 1 billion and Credit Suisse Group AG
predicting $1 trillion in online payments in the country in
2023, the companies chosen to enable such transactions
stand to reap lucrative commissions.

What is the need for NUE now?
Currently, the umbrella entity for providing retail payments
system is NPCI, which is a non-profit entity, owned by banks.

34 | 2022 | JUNE | BANKING FINANCE