RBI suggests ease of norms for Retail Payment Systems, discusses competition concerns

The Reserve Bank of India (“RBI”) on January 21, 2019 floated a policy paper on ‘Authorisation of New Retail Payment Systems’. This policy expresses risk considerations arising from extant concentration risk in retail payment risks, from a financial stability perspective. The Policy discusses possibilities of review of norms pertaining to the entry of retail payment systems to encourage and foster innovation and competition.


Number of entities authorized under the PSS Act (as on 31.12.2018
Payment System No. of existing operators
Retail Payment System Umbrella Organization 1
Card Networks 5
PPT Issuers (Non-banks) 48
Instant money transfer 1
ATM Networks 5
Bharat Bill Payment Operating Units (BBPOUs) 8
Bharat Bill Payment Central Unit (BBPCU) 1
Total PSOs 89
Number of banks approved under the PSS Act (as on 31.12.2018)
Payment Systems No. of Banks approved
PPI Issuers 60 Commercial – 54
Co-operative – 5
RRB – 2
BBPOUs 37 Commercial – 29
Co-operative – 6
RRB – 2


As on January 21, 2019, the report enlists that NPCI processed nearly 48% of retail electronic payment transactions (excluding paper) in volume aggregating to 15% of the value of retail electronic payment transactions.

RBI has analysed the systemic and operational risk arising from the possibility of a single point of failure, the risk of lack of innovation arising from inadequate competition and inefficiencies arising from monopolistic trends.


In light of this, the policy firstly discusses the possibility of permitting multiple entities to provide operation by permitting receipt of application for all payment systems open on-tap and prescription of a specific point of arrival metrics enabling entities unable to scale within a well-defined timeline to exit.

Secondly, the policy discusses suggests a review of entry point capital (networth) requirement depending on the risk levels of the respective system and on analysis of capability-potential of the entities. It suggested a reduction of networth for WLAOs, BBPOUs and TReDs

And Finally, it envisions the alignment of regulatory framework for both banks and non-banking entities.

All payment systems would be desired to have a physical presence in the country, an impeccable track record and likeliness to conform to the best overall standards including those pertaining to customer service and efficiency.

This should be positive news for potential entrants in the evolving retail payment segment and consumers alike, as this would increase options available to the consumers


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