Author: root

The service is likely to be rolled out on top of the interoperable UPI protocol. The key differentiator would be that the feature phone users won’t need a third-party app or stable internet connection to complete their transactions.

The ‘Interactive Voice Response’ (IVR) payments project is currently in beta-testing mode with the Reserve Bank of India closely monitoring the pilot as per provisions laid under the central bank’s Regulatory Sandbox (RS), the sources said. A larger rollout would be subject to approvals from RBI after the culmination of the first phase of testing.

The solution has been created by Bengaluru-based fintech Ubona Technologies with a private sector bank currently enabling transactions on the backend, sources added. ET couldn’t independently verify the name of this lender.

Both NPCI and RBI are learnt to be testing various feature phone-based payment solutions that cut the need to have an internet connection or an expensive authentication device like biometric scanner or point of sale (PoS) device, a source said.

NPCI didn’t respond to ET’s mailed queries. A spokesperson from Ubona couldn’t be immediately contacted.

As envisaged by the NPCI the service will allow users of feature phones to make merchant payments as well as peer-to-peer (p2p) transactions by simply generating an authentication PIN linked to their bank account and debit card as well as the registered mobile number.

This is similar to how UPI PINs are generated. However, instead of a smartphone through third party internet apps, feature phone users will be able to generate authentication PIN through a common dial-in service which may be operated by NPCI.

The PIN can be then used at merchant points enabled for such transactions wherein the account holder can use their feature phones to select the payment size and merchant details through a Dual Tone Multi Frequency (DTMF) system which will likely guide the user through the two-factor authentication (2FA) flow in local languages.

DTMF is a technology used with touch tone phones to allow callers to use keypads that correspond to the number of the menu option and select preferred options.

The other leg of this system involves acquirer banks enabling their merchants with a proxy identity number that can be used to authenticate the acceptance part of the transaction. The existing interoperable standards between banks on UPI network allow two or more banks to communicate and vet small-ticket payments in real time.

“There are several legs of this payment system which need to be solved for mass adoption, such as strengthening security and access, as well as enabling banks with concurrent calling infrastructure that can handle thousands of calls at a time,” said a source cited above. “However, these considerations are for the future when NPCI and RBI allows a larger rollout of this service. The initial results are promising,” the person added.

“Another pressing concern is that millions of cards have expired under RBI’s chip-and-pin rules. For such a service, these cards would not be valid anymore,” the source added.

As part of NPCI’s pilot, several leading payment acquirers have been shown demos of this service for feedback, the sources added.

ET had exclusively reported in December 2020 that RBI was testing offline payments through feature phones in a handful of villages in coastal Karnataka in partnership with global card network Visa, private lender Yes Bank and digital wallet venture Yuva Pay.

There are at least four other such experiments in the work as well under RBI’s first RS cohort, all largely focusing on developing an offline payments network for feature phone users to make payments without an internet connection.

As defined by RBI, an RS refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain relaxations for the limited purpose of the testing. RBI had introduced this concept in 2019 with live experimentations starting in 2020.