Home / Money / Personal Finance /  6 innovative payments solutions to look forward to

To aid innovation of new financial products, Reserve Bank of India (RBI) came up with guidelines for a regulatory sandbox. It invited fintech companies to be part of it and test their new products.

A regulatory sandbox allows companies to live test new products in a controlled environment. Regulators can see the entire process and decide on what to allow and what not to and a product's viability.

Through pilots and field tests, the regulator knows the benefits and risks of new financial innovations. All this helps regulators to implement new norms quickly to aid the innovation of products.

The regulator has shortlisted six companies to test their innovative products in its regulatory sandbox. Here are the innovations to look forward to once RBI approves the fintech companies.


RBI is implementing the regulatory sandbox in three areas. One, where regulations are absent. Two, where there's a need to ease regulations for enabling innovation. Three, the proposed innovation shows the "promise of easing or effecting financial services delivery in a significant way".

The regulator has also shortlisted a few areas of focus, including segments where there's a need for innovation in products and services, and it feels that the implementation of new technology can help.

In the first phase or first cohort, the regulator received 32 entries, and it has selected six for the test phase. The first phase's theme was retail payments with a focus on mobile payments, offline payment solutions, and contactless payments.


In November, two fintech companies started testing their products. The other four stated in November.

Among the first two firms is Jaipur-based Natural Support Consultancy Services Pvt. Ltd. It has started testing a product called eRupaya, which uses near-field communication (NFC) based prepaid card and Point of Sale (PoS). The company has already tied-up with Punjab National Bank for it.

The focus is on merchant and offline digital payments in remote locations. It will help to process payments through NFC without the need for internet connectivity. The prepaid card can be recharged for a maximum of 2,000 a day and 20,000 a month through PNB's branches, ATMs, business correspondents, and so on.

Similarly, Delhi-based Nucleus Software Exports Ltd. has started testing its product PaySe. Even PaySe is an offline as well as online digital payment smartcard that uses the NFC technology. The card can be accepted through PaySe devices that accept payments and store electronic cash in the offline mode. The payment works independently of a bank account.

Among the four entities that started testing in December is Mumbai-based Tap Smart Data Information Services Private Ltd. It's product CityCash also uses NFC technology using a prepaid card to facilitate offline person-to-merchant (P2M) transactions. Customers can use it as a travel pass to pay for bus tickets and as a wallet for payment at select merchants. Fino Paytech is one of the investors that is backing the company.


Bengaluru-based Naffa Innovations Pvt. Ltd. uses sound waves for fast and secure transactions. Branded as ToneTag, the company uses encrypted sound waves to make offline, proximity-based contactless payments.

It can be used on any existing device, including feature phones. ToneTag is testing offline payments to merchants via UPI (unified payments interface). To make a payment, customers need to tap their phones on the ToneTag's device.

A sound wave is emitted that carries data, which is received by the merchant's device, and the payment is completed. It works just like NFC payments. The company has multiple patents for the technology it uses.

Bengaluru-based Ubona Technologies Pvt. Ltd. uses sound waves for multiple uses. One of their offerings is the verification and identification of customers using their voice. The company is testing voice-based UPI solutions that can be used for person-to-person (P2P) and P2M offline payments.

Ubona Technologies has also supported (incubated) UltraCash, a company that uses very high frequency and inaudible sound waves for data transfer between two mobile devices. The sound waves are emitted and received using a phone's speaker and microphone and can be used for payments.

The last company that RBI has selected for the regulatory sandbox is Eroute Technologies Pvt. Ltd. based in Noida. The company is testing a UPI-based offline mobile solution that uses a smartcard that has an embedded SIM. Payments will be made using the SIM Toolkit menu.

These six entities were part of the first cohort of RBI's regulatory sandbox. The central bank has started accepting applications for the second cohort on 21 December 2020, which ends on 15 February 2021. The theme for this is cross-border payments.

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