Six consortiums in the fray to bag NUE licence for retail payments

Last month, RBI extended the deadline to apply for licence at the behest of IBA

As the deadline to apply for a new um­brella entity (NUE) licence comes to an end, atleast six consortiums are in the fray to bag the coveted licence to set up a for-profit National Payments Corporation of India (NPCI)-like body for retail payments.

 

The race to get a licence has seen intense competition as a number of banks, fintech companies, payment firms, tech and e-commerce giants have shown interest in being part of consortiums. So far, it is not known how many lic­ences are on offer. But experts have suggested th­at at least two licences for setting up a NUE for retail payments are up for grabs.

 

Axis Bank and ICICI Bank, under the name Mopay, are co-leading a consortium that has e-commerce giant Ama­zon, card player Visa, Pine Labs, and Bill Desk. While Axis and ICICI will hold 20 per cent each, the other players will own 15 per cent stake each. Other consortiums inc­lude Tata Group’s Ferbine, where private sector lenders such HDFC Bank and Kotak Mahindra Bank have 9.99 per cent stake each, and Airtel Digital has 10 per cent stake. Other partners include MasterCard and PayU, and Nabard, which will also hold 9.99 per cent stake.

 

Furthermore, Paytm, along with Ola, under the name Foster Payments, is also eyeing a NUE licence. Paytm founder and CEO Vijay Shekhar Sharma had earlier said, Paytm’s consortium for applying for the NUE licence is the “most diverse.” Other players who have joined hands wi­th Paytm and Ola in this consortium, according to reports, are IndusInd Bank, Suryodaya Sm­all Finance Bank, PolicyBazaar, Centrum Finance and Zeta Pay. Also, tech giants like Goo­gle and Facebook, along with Jio Platforms as well as So Hum Bharat, an entity promoted by Payments Council of India and Infibeam Aven­ues, have joined hands to apply for NUE licence.

 

There are two other consortiums in the fray: one involves Financial Software and Systems (FSS), a leading provider of payment products and processor, India Post Payments Bank, and a few other players; the second one is by FIS, a top provider of technology solutions for merch­ants, banks, and capital markets firms globally.

 

Earlier, Indian Bank, Central Bank of India, India Post Payments Bank, Nabard and a few small finance banks, led by FSS, were in talks to file an application for NUE licence. Punjab National Bank, Union Bank of India, and a few other fintech companies led by FSS were also discussing the prospect. However, Business Standard could not verify if these players are involved in these two consortiums.

 

The NUE would be tasked with setting up, managing, and operating new payment systems in the retail space. It will also be operating payment systems such as ATMs, white-label PoS, Aadhaar-based payments, and remittance services. And, one of the reasons for the RBI to grant NUE licence is to reduce the dominance of the NPCI in the system.

 

In a 2019 policy paper, the RBI had said it was concerned with a few entities in the payments space becoming too big, which had led to higher concentration of risk. In the paper, the RBI noted that the NPCI had become pivotal to operations of many retail payment systems.

 

There are many complicated tasks, which create conditions for monopolistic behaviour in terms of quality of service, access and charges. Experts have said the plan and structure for the proposed entity should be robust with a capacity to take on the NPCI. More than the competition, it is important to see how the system could be made more efficient to tap the vast business opportunities.

 

“Today, we have created a fair bit of competition on the distribution side. We are probably the only market where Amazon, Google, Face­book, incumbent banks, and start-ups are all competing. So, that way, the customer-end of the innovation landscape has settled. The next stage is to create an open model at the platform level. The NUEs will allow entities involved to leverage their own synergy and drive innovation by getting a sense of ownership. It will also drive deeper market participation,” said Vivek Bel­gavi, partner, fintech leader, PwC India.