Fintech execs eye new e-pay entity’s licence

(This story originally appeared in on Nov 16, 2020)

Bengaluru: The race for the proposed new umbrella entity (NUE) for retail payments is heating up. ItzCash founder Navin Surya and Infibeam Avenues executive director Vishwas Patel are joining forces to set up a new firm to apply for the NUE licence with the RBI. Paytm Payments Bank is also considering to apply for a licence, three people aware of the matter said.

This adds to the “strong interest” already shown in the NUE from HDFC Bank. Additionally, India’s largest conglomerates like Reliance (through Jio) and Tata Group are also looking to apply for the licence as digital payments continue to soar, aided by the pandemic. The NUE will challenge the National Payments Corporation of India (NPCI) and is expected to offer services like managing ATMs, point-of-sales machines, Aadhaar-based payments and remittances.

So Hum Bharat Digital Payments is the entity set up by Surya, which will have the backing of Infibeam Avenues, the firm which offers payments gateway and e-commerce solutions. While large conglomerates and financial services companies are also looking seriously at NUE, So Hum would be the first entity that has been set up for the NUE and announced its plan to apply for the licence soon. The deadline for applications is February 2021.

So Hum is planning to leverage the NUE to expand digital payments in India beyond urban consumers with a focus on non-metro users. In a statement, Surya and Patel said their aim would be to grow the active digital consumer base to 600 million over the next decade compared to the current base of 100 million. It is in discussions with a range of investors and startups to partner for the NUE. These details have not been disclosed yet.

The RBI rules for the NUE mandate that a single promoter can’t have over 40% stake in the firm, with a plan to dilute it to 25% over a period of five years. “Paytm Payments Bank is also looking to apply for the NUE as a bank with other partners,” a person aware of the Noida-based firm’s rationale said. A spokesperson for Paytm Payments Bank declined to comment. “There is definitely a plan to get this licence for HDFC Bank. The mandate (to expand digital payments) is clear from the government as well as the regulator side. They (HDFC Bank) are firming up partner plans and other details currently, “ another person aware of the matter said.

Emails sent to HDFC Bank, Tata Group and Reliance Jio did not elicit any response. US-based tech giants like Google, Facebook and Amazon are also reportedly in talks to partner with Indian promoters for NUE, but those are not finalised yet.

Bengaluru-based payments startup Razorpay, which recently became a unicorn, is also looking to partner for the NUE with Indian promoters for a “minority stake”. “Razorpay is looking at it from a partner point-of-view and not being a principal promoter. It is in talks with multiple entities looking at the NUE. They are looking to offer their technology expertise to these potential partners,” one of the sources said. Razorpay co-founder and CEO Harshil Mathur declined to comment as well.