PremiumNEW DELHI: Top banks and corporate entities are forming partnerships to apply for the license for the new umbrella entity (NUE) that will allow them to set up a digital payments network.
According to reports, Reliance Industries has partnered with Facebook, Google, and Infibeam to apply for the license. More are eyeing the license. Paytm and Ola have partnered with IndusInd Bank. Tata Sons have joined hands with HDFC Bank and Kotak Mahindra Bank. Amazon plans to apply in partnership with ICICI Bank and Axis Bank.
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Here are five things to know about the NEU license:
1. Think of the NUE as an alternative to the National Payments Corporation of India (NPCI) which does not have much competition at present. Among other things, NPCI owns and manages the UPI (unified payment interface) platform. It also runs the RuPay network that rivals Visa and MasterCard.
Establishing the NUE could accelerate innovations in payments and give users alternatives to NPCI. However, the network and system that the new entities develop should interact with NPCI's systems and be interoperable, according to RBI's guidelines.
2. Those who receive the license will set-up, manage and operate new payment systems in the retail space, including ATMs, points of sales, remittance services, Aadhaar-based payments. The entities will also manage newer payment methods, standards, and technologies.
3. The entity will also operate clearing and settlement systems for banks. It will be responsible for identifying and managing risks in its network and monitor retail payment system developments and related issues in the country and internationally. It will be responsible for preventing frauds that can affect payments systems.
4. It will frame necessary rules and related processes to ensure that systems and networks are safe and sound and that payments are exchanged efficiently.
5. The new umbrella entity will offer innovative payment systems which enhance access, customer convenience and safety. The Reserve Bank of India may allow the umbrella entity to participate in its payment and settlement systems.
