E-pay platform NPCI to face competition

MUMBAI: The RBI has prepared the ground for allowing competition to the National Payments Corporation of India (NPCI) to come up through private investments, which could include for-profit companies. The minimum capital requirement has been fixed at Rs 500 crore.

The new entity will set up, manage and operate new payments systems, especially in the retail space, comprising but not limited to ATMs, white-label point-of-sales (PoS) machines, Aadhaar-based payments and remittance services. It will also develop new payments methods, standards and technologies and spend on raising awareness of payments systems.

In India, currently, the NPCI is the only entity that provides an ecosystem for payments. The NPCI operates the RuPay and Unified Payments Interface (UPI) networks. It links all the ATMs of different banks to one network and manages other forms of electronic payments. Although it was carved out from the RBI, the NPCI is today a banksowned non-profit company.


Last month, in its policy paper on new payments systems, RBI had highlighted the risks of a monopoly. These included a single point of failure that makes the entity too big to fail, and lack of competition that results in fewer innovations and inefficiencies. The RBI has now published a draft framework for the setting up of a ‘new umbrella entity’ focusing on retail payments to be authorised under the Payment and Settlement Systems Act 2007.

The RBI has said that the new entity must be ‘owned and controlled’ by residents with three years’ experience in the payments ecosystem as either a payments system operator, payments services provider, or technology services provider.