As part of its efforts to create more creative and inclusive digital payments solutions for the Indian population, Paytm announced on Tuesday that it is applying for an NUE (New Umbrella Entity) in a consortium with players like ride-hailing platform Ola.
Paytm founder and CEO Vijay Shekhar Sharma told PTI that the company sees the NUE system as a great opportunity for payments in the region.
“We’ve previously stated that payments have become mainstream, and it’s critical that we expand payment options and opportunities for both customers and businesses. The RBI has taken notice of this and has offered applicants the opportunity to apply for NUE. We will definitely apply…the process is underway “he said.
When asked if Ola will be a part of the consortium, Sharma said it would be one of the main players.
“It (the consortium) will include a bank, a small finance bank, a payments bank, a fintech company, a software company, and an NBFC – one of the most diverse NUE consortiums that we will see,” Sharma said, but did not elaborate.
Ola did not respond to an emailed request for comment.
The Reserve Bank of India (RBI) issued a mechanism for authorising an umbrella body for retail payments in the country in August of last year, inviting applications from interested parties by February 26, 2021.
The Reserve Bank of India has extended the deadline to apply for NUE to March 31 after receiving requests from various stakeholders, including the Indian Banks’ Association, to do so in light of the pandemic.
NUEs will be formed as a for-profit corporation under the Companies Act of 2013 and will be approved under the Payment and Settlement Systems Act of 2007. (PSS Act). These companies will be in charge of tasks including setting up, managing, and running new payment systems in the retail sector.
These activities include, but are not limited to, ATMs, White Label PoS, Aadhaar-based payments, and remittance services; newer payment processes, standards, and technologies; monitoring relevant issues in the country and internationally; and addressing developmental goals such as raising payment system awareness.
They will also be responsible for operating clearing and settlement systems for participating banks and non-banks, as well as any other sector that will help to improve the country’s retail payments ecosystem.
Several companies have reportedly collaborated with banks and major tech companies to apply for NUEs. Reliance Industries, Facebook, and Google — all of which have invested in Jio Platforms — are reportedly planning to apply, while Tata Group has partnered with HDFC Bank, Kotak Mahindra Bank, MasterCard, and Bharti Airtel.
For the NUE licence, Amazon is said to have partnered with Visa, ICICI Bank, Axis Bank, and fintech startups BillDesk and PineLabs. These, however, could not be reliably verified.
According to Sharma, NUE would allow for the development of more scalable payment systems.
“We see it as an opportunity to provide more innovative, inclusive payment solutions to a huge Indian population… We think we can help in this regard. As a result, we see this as an opportunity to be a catalyst for payment scaling in this country ” he added.