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47. Payment Digest-II

When I was growing up, there were 9 planets and today, we only have 8. Yes, Pluto is still revolving around the Sun but it is not a planet any more. We humans have the profound capacity to change things and at times, we change things which are not even in our control. And it doesn’t even matter… like having 8 planets instead of 9… who cares… neither we nor Pluto… right?

Here is a list of few things that changed since my last ‘payment digest’ and these things will definitely affect the payments ecosystem:

NPCI and more little NPCIs

NPCI keeps doing wonderful things and UPI has to be the crown jewel among all the products. Even the man who built Microsoft is all gaga about it. Naturally, NPCI wants to take UPI and RuPay to outside India, so NPCI spun off a new entity NPCI International Payments Ltd (NIPL).

This is an official entity that will be ‘going out’… but UPI had already crossed the border in 2019 with pilot/testing in Singapore. Recently, PayPal’s international money transfer entity, Xoom, integrated with UPI for remittance to India.

Looks like UPI will be our next big export… Anyway, Bon Voyage, NIPL !!!

NPCI didn’t stop at that… NPCI spun off another entity NPCI Bharat BillPay for efficient management of BBPS. As new sectors are opened up for BBPS, NPCI need to bring in focus to make the model successful.

Wonder what happened?? Is it because NPCI has become too big to fail as hinted by RBI (Read here) or is this a well thought plan to counter the NUE (New Umbrella Entity) and bring in more focus & efficiency?

PA & PG guideline Update

With the aim to regulate the Payment Aggregators and Payment Gateways, RBI had issued a new guideline in Mar’20 (Read Here)

RBI amended the guideline with one big change — now PA/PG can use two Escrow Accounts to move the funds instead of one. This will help the PA/PG to hedge the risk and also, PA/PG can enjoy relationships with two banks for subvention, leads etc.

2K to 5K

With the aim to push digital payments and to provide better experience, RBI updated the guidelines for contactless payment on cards (Visa, MasterCard, Amex and RuPay) and UPI AutoPay. The transaction limit is changed from Rs.2000 to Rs.5000 from 1st January 2021.

If your card is enabled for contactless payments then you can swipe up to Rs.5000 without PIN and in case of UPI AutoPay, mandates can be debited for up to Rs.5K. This means more use cases will open up for AutoPay solution plus POS transactions will be much more faster… Personally, I hate typing PIN so good for me

Upper cap of 30%

This guideline is a bit strange — NPCI is capping UPI transactions by a single App (e.g. G Pay, PhonePe, PayTM etc.) to 30%. Existing Apps have two years to roll it out in a phased manner but new entrants (e.g. WhatsApp) have to follow it from Jan 2021.

Maybe NPCI is thinking of not allowing monopoly (possibly by WhatsApp or Google) but what if G Pay reaches the 30% threshold when I am doing a transaction, do I install PhonePe to go ahead then or wait till next month??

Monopolies, competition and regulation are quite jumbled up — you might have heard about what is happening in the USA against Facebook. Anyway, that we can discuss later but read this article about the NPCI’s cap.

After NEFT was made available 24x7, now RTGS will be available 24x7. The move will bring more efficiency in case of large transfers. Here is the article that covers the journey of RTGS (Do read it)

Game Plan or Ban

Gaming sector is super fascinating…during the lockdown phase, this sector saw a massive jump. Money based games are highly sensitive from the optics of the law, regulation and society. Few are skill based (rummy, fantasy sports) and few are luck based (any type of betting). Although skill based games are fine but few states such as Assam, Odisha, Sikkim, Nagaland and Telangana had imposed bans on these games. Then Andhra banned them followed by Tamilnadu and now, Karnataka is planning to ban them too.

Gaming is a large and fastest growing sector. Merchants in this sector are aware that the optics of their business is ‘a bit different’. So they self-regulate themselves by forming federations (e.g Rummy Federation and Fantasy Sports Federation]. Recently, even Niti-aayog also recommended self-regulating Fantasy Sports to provide uniform & sustainable growth for the sector (Read here)

What is the use of self-regulation? Please read the ‘closing notes’ in the article on gaming sector (Here)


One of the biggest challenges w.r.t. Innovation in financial services is regulation & compliance. But without innovation, we cannot solve the larger problems. So how do you boost innovation within frameworks?

Answer: ‘The Sandbox’. A Sandbox is a controlled environment where regulators, financial service providers can build solutions for certain problems. Such sandboxes help all the stakeholders to identify the risks and thus come up with processes, frameworks and solutions that can be rolled for larger audiences.

Recently, RBI announced its second Cohort for the sandbox on Cross-border payments. As the people, goods and services cross the border, the funds also move in & out of the border. India received $27.4Billion inward remittance in the first of this financial year. That is huge… right? RBI wants innovation to streamline this growing cross-border piece.

The first cohort (Nov’19) of Sandbox was about retail payments with focus on payments for feature phones, offline payment solutions and contactless payments. And the result… 32 entities applied, 6 were selected and started testing their solutions.

The theme for the third cohort is MSME (micro small medium enterprise) lending but the central bank is yet to publish the details

There are many more updates in the payments domain, new guidelines, amendments to older circulars, companies building innovative things, companies doing old things but calling it a new thing.

At times, so many circulars, updates, changes, innovations and repackaging of digital payments feels a bit fast and confusing… Example: On the first day of 2021, at least 3 new changes will be in effect — transaction limit change on contactless payment & UPI Autopay, ‘positive pay system’ for cheques above Rs.50000 and mandatory FasTag

But don’t overwhelm yourselves with so many changes as few of them won’t even impact you (like removing Pluto from the list of planets). But these things do make sense if you remember the core purpose of all this…

‘moving money from A to B securely, efficiently and cost effectively’.

Year End Note:

Coming back to the topic of planets… inhabitants of No-3 planet of the solar system had a tough year. A regular year turned out to be a nightmare… I really ‘hope’ that 2021 will be something new, something better…just like the ‘change’, even the ‘hope’ is constant.

As the last note for this year, I am sharing this video with you and hope it ‘touches’ you… meanwhile, stay safe… and see you on the other side !!!




Everything about digital payments, products/platforms, processes and players in dynamic and evolving India’s payment eco-system. You can order a book on <>

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Aditya Kulkarni

Aditya Kulkarni

Trying to follow Richard Feynman’s words “do what you can, learn what you can, improve the solutions, and pass them on”.

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