Flipkart, Mastercard, Nabard and PayU to hold 30% in Tata NUE

Mumbai: Walmart-backed Flipkart, Mastercard, PayU and National Bank for Agriculture and Rural Development (Nabard) are together buying a 30% stake in Ferbine, the Tata-promoted company that plans to set up a national payments infrastructure rivalling National Payments Corp of India (NPCI), said three people familiar with the matter.

This agglomeration will vie with consortiums led by Reliance Group and global e-commerce giant Amazon to get licences from the Reserve Bank of India (RBI) for creating New Umbrella Entities (NUEs), the name given to companies that will set up, manage and operate retail payment systems in the country.

Tata Group will own 40% in Ferbine while Airtel Digital, Mastercard and Nabard will hold 10% each. Flipkart, through its subsidiary FlipPay, and Naspers-backed PayU will own about 5% each in the Tata entity. HDFC Bank and Kotak Mahindra Bank will hold 9.99% each in Ferbine.

“The Tata Group is leading the consortium. Ferbine has been set up solely to apply for the licence to set up a pan-India payments network which can process online payments with a specialised focus on e-commerce transactions. An official bid has been submitted to the Reserve Bank of India,” said a source cited above.

Mails sent to Flipkart, PayU, Nabard and Mastercard didn't elicit a response. A Tata Group spokesperson declined to comment for this story.

From Facebook to Google to Amazon, companies are vying to have a pie of the domestic payments infrastructure that’s forecast to grow by billions of dollars, making India one of the fastest growing and open digital payment markets in the world. Digital payments grew at an annual rate of 55% in the past five years in the country, and the pandemic has further accelerated the shift.

If it gets the RBI nod, Ferbine may build a pan-India payment network similar to Unified Payments Interface (UPI) for a settlement mechanism for e-commerce and online retail transactions.

Tata Plans

A strong payments engine powered by an NUE could strengthen the salt-to-software conglomerate’s foray to build a unified retail platform to take on the likes of Reliance and Amazon in India.

Tata Group chairman N. Chandrasekaran had last year announced plans to build a super app under Tata Digital as part of its larger e-commerce and financial services play. This is expected to follow an open architecture model offering plethora of e-commerce choices and financial products among others.

The expertise of Flipkart, HDFC Bank and Mastercard in processing a bulk of India’s online retail payments will help in the setting up of this venture, sources said.

“Flipkart’s investment is smaller compared to some of the other consortium players. The idea is to collaborate strategically and build a network that can further digital payments growth in India,” said a person aware of the development.

Flipkart owns a significant stake in PhonePe which is the leading UPI app in India. PhonePe alone processed 972 million of the 2.3 billion transactions on UPI in February.

The last date for submitting NUE applications to the RBI was February 26. This has been extended till March 31.