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63. Payments Digest — V

Hope all of you are doing well… here is the next Payments Digest… a lot of things to cover, so, it is a bit lengthy.

Last few months… RBI is keeping everyone in the ecosystem busy while NPCI is flying abroad and at the same time, new business platforms are being developed and industry is going through its own events…

Personal Impact: I hope few of you are aware that I have written a book on Digital Payments (Buy Here). Some of these regulatory changes will impact a few topics in the book. If you see any discrepancy in the book then please highlight to me ( and I will update the content and republish the book next year.

Let’s start with the updates.

— — — — — — —— — — RBI Update — — — — — — — — — —

A. eMandate on Cards:

New guidelines are in force since 1st Oct 2021. But the entire process was nothing less than a fiasco… delays, confusion, extension and inconvenience… and it will continue to be the same until all types of cards, banks and card schemes are covered. There were loads of news articles about how this new regulation impacted businesses… Also, at the same time, there were news articles that say that customers are happy with new guidelines.

I have written about older SI on Cards model (Read Here) and new model (Read Here). I’ve also written a fresh article that compares old and new models (Read Here).

Violation: Policy Bazaar has set-up a mandate on my card without performing AFA (2FA). Yes, it did? It violates new guidelines of RBI and I am going to have some fun with BillDesk, HDFC Cards and Policy Bazaar.

B. IMPS limit Change

RBI has increased the limit for IMPS transfers from present Rs.2L to Rs.5L.

With this change, this is the present state of our transfer rails/platform/products.

With the new change, users can now transfer more than Rs.2L and up to Rs.5L in real time on IMPS.

But even RTGS can achieve it and at a lower cost… isn’t it? Yes, you are right (1 Mark).

So, then what is the impact of this new change? May be RBI wants to reduce load on NEFT & RTGS rails or RBI wants NPCI & Banks to make some money (NEFT & RTGS are free while IMPS is charged)

Anyway, the changes will take time, as banks have to make changes to their platforms and provision of liquidity. Also, there could be the possibility of having another tier of pricing apart from the existing 3 tier pricing structure.

There could be marginal value addition with this change in success rate when it comes to Business to Consumer/Business payout. Plus banks/PAs who offer payout services can earn additional revenue (provided merchants are okay to pay for it)

C. NACH on all days

From 1st Aug ’21, NACH will be available on all days. That is wonderful!

NACH is plagued with performance (lower success rates during registration and debit). I think NPCI should work towards solving those problems.

After so much noise and fan fare, what is the status of UPI AutoPay? More than one year later, adoption is at tortoise speed and unlike children’s stories, the tortoise is not winning here.

Monopoly is always bad… it breeds incompetence among other things. I was hoping that New Umbrella Entities will do wonderful things… but…

D. NUE on hold

Do you remember those NUE (New Umbrella Entities)… yeah those bunch of companies who decided to play the IPL equivalent of digital payments (Covered Here)

Yup… now you remember… RBI has put the NUE decision on hold.

In general, RBI is a bit concerned with Tech giants who are involved in payments/FinTech in India. Definitely, RBI cannot outrightly ban them but may come up with more stringent compliance policies and enforce it. And RBI doesn’t hesitate to stop companies or put fines. In the past, RBI has banned card schemes (MasterCard, Amex, Diners) and HDFC bank from issuing new cards. Also, recently, levied fines on 5 payment companies…. (RBI Rocks!).

E. Other Regulation Related Updates:

  • HDFC Bank is allowed to issue new credit cards. MasterCard, Amex and Diners are still not allowed to issue new cards.
  • Regulatory Sandbox is a controlled environment for experimentation before rolling out the feature to a larger user base. After ‘retail payments’ and ‘cross-border’ sandboxes, RBI has opened the third sandbox — MSME lending. Keep an eye on these companies as they may develop something interesting.
  • RBI published new guidelines for PPI (Prepaid Instruments). I have covered these guidelines in various blogs (Here, here and here). I will write a separate article on this topic.
  • Account Aggregator — Tutankhamun moment of FinTech was unveiled this year… What is an Account Aggregator? How will it change our lives? Or will it really change anything? I am sure you wouldn’t have missed it as LinkedIn and News were flooded with it. So let me write a separate article on it.

— — — — — — — — — — — UPI Update — — — — — — — — — — -

A. International:

NIPL (NPCI International Pvt. Ltd.) is expanding the UPI foot print in both East and West. After South East Asia, UPI is now available in the UAE. Also, NIPL has partnered with Singapore’s PayNow to enable cross-border remittances by July’22.

B. Standardisation of transaction amount:

Did you know that different banks have different transaction limits on UPI? It is confusing for users and merchants. NPCI has decided to standardise the limits (as per below table). New limits will be in effect from 31st Oct 2021.

Source: NPCI Circular

C. UPI Number:

Do you remember your UPI ID (the mail id kind of thingy)? If yes, congratulations, you are in love with UPI but if you are not then you are a normal person like me.

It is cumbersome to remember UPI ID especially when different PSP App follow different practices. Also, the pain of transferring funds your contact (number) who is on PhonePe and you are on GPay.

So NPCI floated guidelines on UPI Number. Basically it means, PSP apps should provide an option for the user to have a UPI Number (apart from UPI ID/VPA).

PSP App will provide a feature for users to choose a UPI Number, customers will opt for this feature by providing explicit consent and NPCI will manage UPI Mapper to facilitate UPI Number based transactions that are interoperable across PSP Apps.

If a customer doesn’t wish to have a UPI Number, they can still send and receive money using UPI ID.

Presently this feature is in pilot phase (1-Oct-2021 till 1-Dec-2021) for a user base of less than 50 Lakh users. (I do not have much clarity on this pilot).


  • From 1st Jan 2022, Mobile number based transactions (that you do by selecting contact number in your PSP App) will stop in case the mobile number is chosen as UPI number explicitly with customer consent.
  • At present, I cannot send money from G Pay to my contact who is on PhonePe (by selecting his mobile number). This will change and number based transfers will become interoperable (if me and my friend move to UPI Number feature)
  • UPI will become more ‘feature phone’ friendly (not sure how, but let’s go ahead with it… hurray)

— — — — — — — — — — Industry Update — — — — — — — — —

A. PayU + BillDesk

Finally, PayU acquired BillDesk for $4.7B. There are great synergies between these two companies. PayU is prominent in enterprise business and BillDesk is market leader in BBPS (Bill Payment), Recurring payment and other large merchants in investment, insurance and eCommerce segment.

Acquisition is just the beginning of a long and difficult journey. The bigger challenges will come in terms of integrating platforms, people and culture. If you go by the past data, some of the biggest mergers and acquisitions have failed. But the past is not a reflection of the future.

So… I will end this update by conveying my sincere congratulations to BillDesk and PayU!

B. Gaming Ban

Karnataka is the latest State to ban online gaming and other states that have banned gaming are Andhra, Telangana, Meghalaya, Assam, Sikkim, Nagaland, Odisha.

A bunch of gaming companies have filed a petition against the ban in The Karnataka High Court. Skill based games are considered as legal by many Court orders. Recently, Madras High Court and Kerala High Court reversed the ban. So let’s see what happens in Karnataka.

C. Groups

Groups are not new to us… There are various groups/consortiums that protect the group’s interest and occasionally pat each other’s back in events. Even match box traders have their own group/trade association. No surprises, even the payments companies have their own group — PCI (Payment Council of India).

Recently, a bunch of big companies (Microsoft, Facebook, Disney HotStar etc.) formed their own group: MPAI (Merchant Payments Alliance of India). It is a good move (for them) as RBI is keeping a hawk’s eye on these MNCs and is concerned with their super interest in Payments/FinTech. But not sure what is the motto/vision or agenda of this group and how much they voice the concerns of smaller merchants.

D. PhonePe to charge for Recharges

PhonePe will charge Rs.1-Rs.2 for phone recharges. Although this is an experiment, it is important and I think they can achieve two things:

  • Whether users will be ready to pay a small fee for the convenience charged by PhonePe.
  • If these low value users drop-off then it is one way good for PhonePe as they will be able to meet the 30% capping requirement of NPCI without sacrificing its high value transacting users.

— — — — — — — — — Personal message — — — — — — — — —

During last year’s Deepawali, I thought that the worst was behind us but it was not and we were hit really badly with the 2nd wave. Once again, I am feeling that the worst is over… We crossed 1 Billion vaccinations, businesses are resuming, roads are back to earlier ‘jam’ level… I sincerely hope to go back to ‘normal’… But let’s not forget what we went through and what we lost… so let’s value what needs to be valued — Life, family and friends.

Wish you all a happy Deepawali… Let there be light !



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