The Reserve Bank of India, India’s central bank, has been looking at strengthening the payment ecosystem in the country. Setting up the Digital Payment Index (DPI) of India as a comparable holistic indicator was a step in this direction.
Digital payments in India grew from 5.93 billion transactions in March 2016 to 34.35 billion transactions in March 2020. The COVID pandemic led to an 82% rise in Unified Payments Interface (UPI) payments in Q2 2020. As of December 2020, 207 banks were live on UPI with a monthly volume of 2,334.16 million transactions and a value of $57,802.25 million (INR 4,16,176.21 crore).
Currently, the National Payment Corporation of India (NPCI) is the sole umbrella body that facilitates retail payments. While the NPCI owns and operates UPI, the RuPay network, and other payment and settlement functions, New Umbrella Entities (NUEs) will set up, manage, and operate new payment systems, especially in the retail space, including but not limited to ATMs, white label, point-of-sale (POS), and Aadhar-based payments and remittance services. These entities will develop new payment methods, standards, and technologies and monitor payment-related issues in the country and internationally. Considering the massive transaction volumes and the sheer number of new entrants, the NPCI would need additional support to make the big shift to digital in order to strengthen the payment ecosystem.
India’s Central Bank Wants to Further Drive Innovation and Adoption of Digital Payments
The RBI had invited applications for setting up pan-India NUEs. Any entity (promoter or group) that has been w …