Tag: National Payments Corporation of India

How Indian banks are leveraging blockchain technology, BFSI News, ET BFSI

Banking & Finance

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In a bid to foster blockchain technology for providing various financial services, banks have put in place Indian Banks’ Blockchain Infrastructure Company Private Limited (IBBIC).

The Reserve Bank of India (RBI) has informed that it has been proactive in providing guidance for development of blockchain-based application through its new regulatory sandbox environment, the government told the Rajya Sabha.

“State Bank of India (SBI) and Canara Bank are part of a company called Indian Banks’ Blockchain Infrastructure Company Private Limited for using blockchain technology for providing various financial services. SBI has informed that as a part of IBBIC development, it has initiated steps to incorporate blockchain technology in trade-related transactions,” the government said.

Further, SBI has been onboarded on a blockchain-enabled platform, for exchanging payment-related compliance queries.

Canara Bank has informed that it had formed a small technology innovation team, which is working on identifying the potential use cases best suited to banking operations, he added.

The deployment

Banks are looking to deploy the blockchain technology to solve issues in the processing of Letters of Credit (LCs), GST invoices and e-way bills.

Currently, the process of issuing an LC is relatively slow and requires human intervention to prevent frauds, authenticate transactions, and balance the ledger.

Using blockchain to issue LCs would potentially solve these issues. Even elemental fraud like the issuance of two LCs on a single invoice can be easily prevented with the help of this blockchain technology.

The move is expected to eliminate paperwork, reduce transaction processing time, and offer a secure environment. The system will be based on Infosys’ Finacle Connect, a blockchain-based platform that enables digitisation and automation of trade-related finance processes. Disbursements on domestic LCs, which used to take four to five days, can be done in four hours with the technology. The technology has already been deployed or piloted by the likes of SBI and Axis Bank at an individual level.

Who are the stakeholders of IBBIC?

Out of the 15 banks, eleven are private sector banks while four are public sector ones.

The private banks include HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Yes Bank, RBL Bank, IDFC Bank, South Indian Bank, and Federal Bank. And, the public sector units encompass Bank of Baroda, SBI, Canara Bank, and Indian Bank.

The incorporation of IBBIC is similar to that of the National Payments Corporation of India (NPCI), which is an umbrella organization that handles critical real-time products like RuPay, UPI, and FASTag.



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Mobikwik launches MobiKwik RuPay Card

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Mobikwik has collaborated with National Payments Corporation of India (NPCI) and Axis Bank to launch MobiKwik RuPay Card.

“The card will be free of charge to customers and purely digital keeping in line with the growing demand for digital payments across online and brick and mortar stores,” it said in a statement on Friday, adding that customers can now get up to ₹2 lakh of their MobiKwik wallet balance mirrored on the MobiKwik RuPay Prepaid Card.

“The integration of the card with MobiKwik wallet will allow MobiKwik customers to use the card and wallet balance at over 41 million merchants across 190 countries, in addition to the MobiKwik merchant network,” it further said.

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Auto debit transactions: Bounce rates in August near pre-second wave levels

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Bounce rates for auto-debit transactions in August were at similar levels as March 2021 as businesses and borrowers shrugged off the impact of the second wave of the Covid-19 pandemic.

According to data from the National Payments Corporation of India from the National Automated Clearing House (NACH), the bounce rate or percentage of unsuccessful auto-debit transactions in August 2021 was 32.98 per cent.

This is the lowest since March 2021 when the bounce rate was 32.76 per cent. In all, a total of 8.76 crore auto-debit transactions were reported on the NACH platform in August, of which 5.87 crore were successful and 2.89 crore were returned or unsuccessful.

Also read: Resilient demand keeps driving India’s world-beating growth

Typically, auto-debit transactions are for recurring payments such as EMIs and insurance premiums although it does not capture intra-bank transactions. With the second wave of the pandemic leading to localised lockdowns and impacting economic activities, bounce rates had started to climb up from April 2021 after easing from December 2020.

In the last two months, as Covid cases have come down in most parts of the country and the economy has opened up again, bounce rates have started coming down again. Many lenders have reported that collection efficiencies have returned to normal and are at the pre-second wave levels.

“The collection efficiency was reported at about 97 per cent for August 2021, further improving on 95 per cent reported in July 2021 (collection efficiency in April, May and June was 72 per cent, 67 per cent, 90 per cent respectively),” Mahindra Finance had said, recently.

Also read: Latest PLFS suggests India’s labour market is reviving post-pandemic but some segments are hit

With the opening of the economy and improved mobility, it witnessed a meaningful reduction in the NPA contracts during the month as customer cash flows improved and said it expects the downward trajectory to continue in September.

Similarly, CreditAccess Grameen reported that standalone collection efficiency including arrears improved to 99 per cent in August 2021 from 97 per cent in July 2021 and 84 per cent in June 2021, indicating consistent improvement in overdue collections.

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NPCI, Fiserv to open RuPay API platform, BFSI News, ET BFSI

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The National Payments Corporation of India (NPCI) has tied up with Nasdaq-listed fintech firm Fiserv to launch an application programming interface (API) platform for startups and banks looking to build credit card-based products on top of the RuPay rails, said senior company executives.

They said the collaboration will help faster and cheaper onboarding of customers and merchants by banks as well as enable fintech firms to build out new models of digital interfaces for customers launching RuPay credit card products.

“We are trying to expand the credit ecosystem in India, where a lot of great work has happened on the debit side,” Rishi Chhabra, head of India and Sri Lanka at Fiserv, told ET.

The Wisconsin-based firm, which has been operating in India for over a decade, works with seven of the top ten credit card issuing banks in India.

“While collaborating with NPCI one of the shared visions is to expand credit issuance in India,” said Chhabra. “Our tech stack on RuPay will support scalability from an onboarding perspective for both banks and fintechs. We have hundreds and thousands of micro-APIs for the fintech firms to code, consume and onboard and launch their services at scale.”

The collaboration comes at a time when card networks Mastercard and American Express have been barred by the Reserve Bank of India (RBI) from issuing any new cards owing to non-compliance with data localisation mandate resulting in a clutch of card-issuing banks migrating their networks to Visa and NPCI’s homegrown RuPay.

According to Nalin Bansal, the chief of corporate relationships and fintechs at NPCI, the collaboration with Fiserv will help RuPay build an ecosystem around its credit card products, thereby attracting more fintech firms to innovate and scale these offerings.

“In India what we have achieved on debit, we haven’t been able to emulate on credit. The need now is how to make credit more affordable for a larger set of customers,” said Bansal. “The platform will help onboard fintech firms at a fairly reasonable cost and speed. These need not be high-end, premium products. It could be a credit card with lower feature sets and limits to the broad-based credit market in India.”

The platform, called ‘nFiNi’, will power RuPay cards by offering access to services through the NPCI network and Fiserv’s microservices-based platform-as-a-service with a set of APIs. This stack, among other things, will support orchestration of the digital user experience, enable push alerts for in-app, mobile messaging app and SMS notifications, simplified integration options and instant digital card provisioning, allowing customers to transact immediately after being approved for a card.



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WhatsApp brings new ‘payments backgrounds’ feature in India, BFSI News, ET BFSI

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Designed in partnership with the National Payments Corporation of India (NPCI), on the Unified Payment Interface (UPI), the payments feature on WhatsApp enables transactions with over 227 banks.

In a bid to strengthen its payment services offering in India, instant messaging platform WhatsApp has introduced ‘Payments Backgrounds feature on the platform.

“Built for India, this new feature is relevant, exciting, and memorable as it helps people easily convey a feeling along with sending money,” said a company statement on Tuesday.

Designed in partnership with the National Payments Corporation of India (NPCI), on the Unified Payment Interface (UPI), the payments feature on WhatsApp is an India-first, real-time payment system that enables transactions with over 227 banks, it said.

Manesh Mahatme, Director of WhatsApp Payments said: “WhatsApp is a safe space where people share their thoughts and feelings with their friends and family. With Payments Backgrounds, our effort is to bring excitement to everyday payments through WhatsApp and enable our users to express themselves if they wish, through a range of emotive themes denoting celebrations, affection, warmth or fun.”

“We believe that sending and receiving money is so much more than just a transaction. Often, it’s the stories behind the exchanges that are priceless. We look forward to creating more features and functionalities and continue making payments on WhatsApp an interesting and interactive experience,” he added.

Conversations around payments

Conversations involving payments are often imagined to be simply transactional. WhatsApp has created this thematic range of artful expressions to complement sending payments on birthdays, holidays, or for gifts and travel, the company said.

As per WhatsApp, the core idea of this feature update is to create a more personalised experience for the sender as well as the receiver by adding an element of expression when friends and family exchange money.

“Whether it is friends splitting the bill after a meal, sending money to near and dear ones as a token of your love or gifting your sister on the occasion of Rakshabandhan, payment backgrounds make sending money personal and brings alive the story behind every payment,” the statement said.

WhatsApp has been trying hard to make a mark in the already crowded online payments segment in India with strong incumbents including Paytm, Google Pay, PhonePe, Amazon Pay already having consolidated their position.



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What is e-RUPI and how does it work?, BFSI News, ET BFSI

Personal Finance

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-By Tarika Sethia

What is e-RUPI?

The new digital product, e-RUPI is a paperless one-time payment system and a person and purpose-specific digital product.

The contactless e-RUPI is a secure way of transacting as it keeps the beneficiary’s information confidential and can also be tracked by the issuer. It is authorised via a verification code and does not require handling of cash due to its wholly digital and prepaid mode. Additionally, the beneficiary is not required to have a bank account or a digital payment app thus, being a catalyst in boosting financial inclusion in the country.

e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without the requirement of any physical interface.

How can we redeem e-RUPI?

e-RUPI is a prepaid voucher that can be redeemed without a debit or a credit card, digital payments app or internet banking services. It is a QR based or SMS string-based digital voucher that is delivered to the mobile phones of the beneficiaries by the government or by a selected few organisations.

The user can give an e-RUPI voucher instead of cash at the counters of merchants accepting e-RUPI. Covid-19 vaccine jabs can also be received via these newly launched vouchers. Moreover, a variety of donations can be made by this prepaid digital voucher with the assurance of a targeted, transparent and leakage-free transaction. Even the private sector can leverage these e-vouchers as part of their employee benefit and corporate social responsibility programmes.

The pilot avenue of e-RUPI is the health sector where payments via these electronic vouchers will be accepted. The product will gradually move into other segments.

Who is the architect of e-RUPI?

This digital innovation was brought to the fore by the National Payments Corporation of India (NPCI). It was launched in collaboration with the Department of Financial Services (DFS), National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW), and other partner banks.

Which banks have gone live with e-RUPI?

From Axis Bank to ICICI, from Bank of Baroda to Punjab National Bank, in total 11 banks are currently in sync with the e-RUPI product. Bharat Pe, BHIM Baroda Merchant Pay, HDFC Business App, PNB Merchant Pay and YONO SBI Merchant are the acquiring apps dealing with the NPCI’s recent launch.

How is e-RUPI different from UPI?

The Unified Payments Interface (UPI) is a direct bank-to-bank transfer that requires the presence of a bank account or a digital payments app while e-RUPI works independent of bank accounts.

What is e-RUPI and how does it work?

Under UPI payments, there is no way of tracking the money paid, however, e-RUPI facilitates payment tracking for the issuer.

NPCI’s data reveals that UPI experiences a fail rate or technical decline rate (TD) of 1.43% which is an improvement from the high that it had reached of 3.4% in December 2020. In another move, e-RUPI is designed with a pre-recorded amount thus, leading to a much smaller transaction failure rate. An amount is already stored in the voucher within which the payment is made.



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PM Narendra Modi, BFSI News, ET BFSI

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The latest addition to India’s growing catalogue of digital payments solutions, voucher-based digital payment mode e-RUPI, will create a transparent and efficient welfare delivery mechanism, Prime Minister Narendra Modi said in the launch address of e-RUPI on Monday.

The purpose specific digital payment solution, developed by the National Payments Corporation of India in partnership with several government agencies, over its interoperable Unified Payments Interface (UPI) architecture will first be launched for covid vaccine dispensation at private hospitals, PM Modi said.

He added that the use cases for e-RUPI in subsequent years can be expanded from the delivery of various welfare subsidies linked to education, ration, healthcare, and fertilisers as well to relief efforts during natural calamities by different government, non-profit and corporate entities. It can also help in donations and scholarship programs for underprivileged sections of the society, Modi added.

“The launch of e-RUPI for digital transactions and Direct Benefit Transfers is a big step towards ensuring a more effective, transparent and leakage free welfare delivery system in India,” said PM Modi. “With this system, any government or non-government agency can avoid the use of cash to create a purpose specific voucher to intended beneficiaries. This will ensure that the funds will be utilised for its original purpose,” he added.

The payment system has been created by NPCI in association with the Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority. In essence e-RUPI is a digital payments mode which will be in the form of SMS strings or a Quick Response (QR) code delivered directly to beneficiaries of the intended welfare scheme without any intermediary network.

The pilot for e-RUPI will test its applications for free vaccine delivery, with broad scope also set to soon cover NHA’s PMJAY payouts as well as other digitised stamps based use cases for food delivery, fertilisers, healthcare benefits as well as scholarships and ration payments.

“Technology is a tool for social empowerment and transparency,” PM Modi said in the address. “During the pandemic, India has set an example with its Direct Benefit Transfer (DBT) architecture on effective delivery of benefits to the poor, when many countries struggled to find a solution.”

PM Modi also hailed India’s fintech and startup sectors for creating positive solutions towards social upliftment. Citing the UPI’s record volume in July where the channel reported an all-time high 324 crore transactions worth Rs 6.06 lakh crore, Modi said that indigenous payment solutions such as UPI, RuPay and Fastag have helped India lead digital payments innovations.

Now, the launch of e-RUPI marks the first issuance of a digital voucher in India that can be a purpose-specific substitute for bank notes, debit cards or biometric modes of payments. e-RUPI addresses main challenges with bank account based direct transactions such as lack of transparency on end-use, high authentication failure rates, inactive bank accounts as well as lack of cash out points in rural India, according to experts.

Earlier this month, the Reserve Bank of India deputy governor T Rabi Sankar in a speech also hinted that the central bank is working towards first of its kind Indian Central Bank Digital Currency (CBDC) – an Indian sovereign cryptocurrency.

However, e-RUPI would be different from a CBDC in that it won’t be interchangeable with cash or currency and can be redeemed only for the specific use case it has been created. NPCI and select banks – both public and private sector – onboarded as issuing entities will take payment orders from corporate or government agencies which will include the details of persons and the purpose for which payments will be booked. The authentication of the person can happen through the registered mobile number of intended beneficiaries.

The prepaid digital stamp is set to be accepted at enabled centres – first for vaccinations – without a mobile app or internet banking or any other physical interface.



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PM Narendra Modi launches e-RUPI, BFSI News, ET BFSI

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“India has moved forward with a futuristic innovation today. e-RUPI vouchers will play a big role in strengthening Direct Benefit Transfer (DBT) and raise digital penetration in the country. Targeted, transparent and leakage-free delivery via e-RUPI will be beneficial to all.”

e-RUPI, this real-time and paperless service was launched today at 4:30 p.m. by PM Narendra Modi via video conferencing. Developed by the National Payments Corporation of India (NPCI) on its UPI platform, e-RUPI is a QR code or SMS string-based e-Voucher, which is delivered to the mobile of the beneficiaries.

“e-RUPI is a person and purpose-specific digital payment solution.” said PM Modi at the conference.

Launched in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority, the users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the service provider. The e-RUPI vouchers can also be used to make the payment for COVID-19 vaccine shots.

e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without the requirement of any physical interface. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without the involvement of any intermediary.

Digital payments recorded a growth of 30.19 per cent during the year ended March 2021, reflecting the adoption and deepening of cashless transactions in the country, RBI data showed. India has grown copiously in the digital arena after the introduction of the Unified Payments Interface (UPI) in 2016. UPI transaction volumes surged 43.2% in the first quarter of the last fiscal, 98.5% in the second quarter, 104.6% in the third and 112.5% in the fourth quarter.



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All about RuPay, India’s payments network, BFSI News, ET BFSI

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-By Ishan Shah & Tarika Sethia

What is RuPay?

The National Payments Corporation of India’s (NPCI) brainchild, RuPay is a native card payments network initiated by the Reserve Bank of India (RBI). It is a financial services and payment services system launched in 2012 and dedicated to the country in 2014. A fusion between ‘rupee’ and ‘payment’ inspired its name along with the intent to bring India into the global payments market via its indigenous card facility.

Why was RuPay launched?

The proposition of a cashless India was enhanced with the introduction of the RuPay cards. Building a cashless economy requires financial inclusion and RuPay reached rural India and boosted digital payments with the Pradhan Mantri Jan Dhan Yojana scheme. Under PMJDY, 258 million RuPay debit cards were issued in 2020 alone from public sector banks under the Indian government’s financial plan. From 15% in 2017 to over 60% in 2020, RuPay’s Indian market share has accelerated.

Moreover, with no domestic payments network, banks were forced to pay high affiliation charges to multinationals like Mastercard and Visa for trusted associations. Hence, NPCI was created as a non-profit payments company to construct an affordable and accessible payments network for Indians.

Where are RuPay cards accepted?

They are accepted at all ATMs, by POS machines in India, and for domestic online and offline shopping. They aren’t accepted internationally except at those ATMs, POS machines and e-commerce websites where ‘Discover Financial Service’ (DFS) and ‘Diner’ is enabled. Presently, cards under RuPay Global are accepted at over 42.4 million POS locations and over 1.90 million ATM locations in over 185 countries.

Why a RuPay card?

Being a domestic framework, banks issuing RuPay cards are at an advantage as they are not required to pay network registration fees unlike in the case of a Visa or MasterCard registration. With a zero merchant discount rate (MDR), banks have also agreed to charge nothing on UPI and RuPay card transactions. This has made RuPay transactions preferable while also stimulating FinTechs to innovate and provide better payment products to customers because of the ease of UPI and RuPay payments framework.

All about RuPay, India's payments network

It also has a greater reach in rural areas. Under the PMJDY scheme, free RuPay debit cards were given to all bank account holders. As all processing of transactions happens in the country, there is also a lower settlement cost.

RuPay has both debit and credit cards for individuals, corporates, and prepaid cards; there’s a ‘Kisan Credit Card’ available as well. There’s also a ‘contactless’ card that facilitates transactions on a single tap, making payments without disclosing crucial card details.

What does RuPay’s future look like?

With a recent ban on new issuances by MasterCard, RuPay has an opportunistic freeway to capture the credit and debit card market in India. As of November 2020, around 603.6 million RuPay cards have been issued by nearly 1,158 banks.

All about RuPay, India's payments network

Banks are also pushing towards a higher RuPay card issuance after FM Nirmala Sitharaman said, “RuPay card will have to be the only card you promote. Whoever needs a card, RuPay will be the only card you would promote and I would not think it is necessary today in India when RuPay is becoming global, for Indians to be given any other card first than RuPay itself,” at the 73rd annual general meeting of the Indian Banks’ Association (IBA) last year.

Even in the credit space, Visa and MasterCard have made themselves comfortable at the top with huge amounts of credit card transactions happening via POS machines. RuPay can conquer the card space.



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RBI’s new rules on interchange fee, 24/7 bulk clearing facility functional, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India‘s new directions on raising interchange fee and making available the facility of bulk clearing round the clock have become effective from Sunday onwards.

The RBI in June raised the interchange fee for financial transactions from Rs 15 to Rs 17, while for non-financial transactions the increase was done from Rs 5 to Rs 6. These new rates have become applicable from August 1, 2021, as per the RBI’s direction.

An interchange fee is a fee charged by banks to the merchant who processes a credit card or debit card payment.

Besides, the National Automated Clearing House (NACH) has been made available on all days of the week, effective August 1, 2021.

NACH, a bulk payment system operated by the National Payments Corporation of India (NPCI) facilitates one-to-many credit transfers such as payment of dividend, interest, salary and pension.

It also facilitates the collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds and insurance premiums.

During the bi-monthly monetary policy review in June, RBI governor Shaktikanta Das had announced that in order to further enhance the convenience of customers, the NACH will be available on all days of the week.

The facility was available only when banks were open, usually between Monday to Friday. Auto-debit instructions given by the bank account holder were not processed on days the bank were closed like Sundays, bank holidays and even gazetted holidays. Further, since most companies use NACH for salary credits these also did not happen on bank holidays.

Meanwhile, ICICI Bank has revised charges for cash withdrawals from ATMs, cheque books and other financial transactions from August 1. The revised charges will be applicable for domestic savings account holders including salary accounts.



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