August 29, 2016
India has witnessed a lot of FinTech activity in the past year. The huge millennial population, growing economy, and innovative startups are the major factors that have been cited for this activity. Apart from demographic and economic factors, Indian regulators have also done a lot of innovative groundwork to enable and foster innovation. Our previous articles have already captured these details. However, as the excitement doesn’t seem to die down, we provide you with another update on some of the significant FinTech events of the past one month:
As widely expected, the much anticipated UPI system has been rolled out on August 26, 2016. The first sets of banks that have enabled UPI are Axis Pay, Maha UPI, Federal Bank Lotza & Union Banks UPI app. The other banks that are expected to provide this service in the next few weeks are State Bank of India, HDFC Bank Ltd and Kotak Mahindra Bank Ltd and ICICI.
PayPal has launched its personalized digital payment services PayPal.Me (launched globally in 2015) in India. PayPal.me allows business to create a personalized link and send it to their business partners for receiving payments. It provides a one-click payment service enabling SMEs/B2B sellers and freelancers to receive hassle-free cross-border payments.
To prevent black money in the Indian economy, the government is considering the recommendation of Special Investigation Team (SIT) to ban cash transactions of Rs. 3 lakhs and above. If this kind of transaction takes place, it will be considered as an illegal transaction and the victim will be punished as per the law. The law, if implemented would boost electronic/digital transactions where payments and B2B banking FinTech players could benefit.
Credit bureaus have requested RBI to make payments banks as its members and share the transaction data. Although payment banks are not licensed to lend, credit bureaus believe that by analyzing the transaction data, they would be able to build better user profiles and improve the credit scoring metric. However, this initiative – even if accepted by RBI – would need the amendments in the Credit Information Companies Act to be implemented and hence, could take a longer time than expected.
The RBI has set up a working group with the aim to analyze and provide an update on the growing FinTech segment. The group is supposed to provide a report in six months’ time with a comprehensive analysis of the segment which includes cybersecurity, blockchain, bank partnership, financial inclusion among other details. RBI has also announced its keen interest in understanding blockchain and its implications.
In mid-2015, NPCI had first discussed the concept of making cash deposit machines interoperable. According to a tweet by AP Hoota, MD & CEO of NPCI, three banks – Andhra Bank, Union Bank of India, or the Punjab and Maharashtra Co-op Bank – have started making interoperable cash deposits with the aim of making all banks follow suit. Also, as a part of the Financial Inclusion scheme, the govt. has mandated all business correspondents (BCs) or micro-ATMs to be interoperable from August 2016.
MobiKwik has raised $40 million from South African payment systems company, Net1. With this deal, MobiKwik will combine Net1 virtual card technology with its online payment system and mobile wallet.
One97 (Paytm’s parent group) is reportedly planning to raise $300–350 million from investors MediaTek Inc., Temasek Holdings Pte. and Goldman Sachs Group Inc. The money, if raised, is expected to be invested across all the existing Paytm’s applications (which include an online commerce marketplace, a payments bank and a mobile wallet).
NPCI has partnered with the Union Bank of India and launched a USSD-based *99# mobile application (available as Union Bank *99# APP on Google Play Store). With this initiative, NPCI aims to provide basic services like balance inquiry, fund transfers, and mini statements to be made available even offline (without the use of mobile data/Wi-Fi services).