Sunday, May 19, 2019

Acceptance Development Fund (ADF) – Should it be restricted only to Card Infrastructure??

          Reserve Bank of India in its Payment and Settlement Systems in India: Vision – 2019-2021 document outlines the need for ADF to facilitate innovations in Digital transactions and reduce the cost for digital transaction acquirers.


Creation of an Acceptance Development Fund (ADF) to subsidise acquirers for deploying PoS acceptance infrastructure in tier-3 to tier-6 centres. This would help in facilitating innovation and reducing cost of such transactions.

          The share of digital transactions in Tier 3 to Tier 6 centres in the overall financial transactions’ portfolio is less when compared to Tier 1 or Tier 2 centres.

          One of the reasons for the low share of digital transactions in Tier 3 to Tier 6 centres, is the acquirer’s reluctance to deploy the required infrastructure for digital transactions stating a long gestation period.

          Hence, the need for an ADF to speed up the infrastructure roll-out for Safe Digital Transactions.

          The concept of Acceptance Development Fund (ADF) was first mentioned by Reserve Bank of India in ‘Concept Paper on Card Acceptance Infrastructure’, released in  March 2016.

          This concept paper outlines the contours of the ADF i.e ADF Management, contribution to ADF, parameters to receive grants from ADF etc.

          The March 2016 concept paper mentions about ADF to strengthen Card Acceptance infrastructure.

In other countries, Mastercard and Visa - the two dominant card network players, are a major contributor to ADF, as cards constituted a major chunk of digital transactions.

 However, the main differentiation between India and other countries is UPI. UPI has no parallel anywhere else.

The launch of UPI (Unified Payment System) has shaken the world of digital transactions. Digital transactions are no longer restricted to Net banking or Debit cards. Now, UPI commands a growing share of digital transactions.  

          Today’s POS terminals support a wide variety of digital transaction channels i.e Credit Cards, Debit Cards, UPI, BharatQR

Pinelabs, Innoviti, Flipkart -  Couple of POS terminals which accept payments via UPI.

          The day’s of POS terminals supporting only Credit Cards or Debit Cards are getting over.

          A cursory reading of ADF in other countries shows that the ADF is heavily tilted towards POS terminals.

However, as the formation of ADF picks up speed, there may debates on the varieties of digital transaction channels which may require ADF support.

          The beauty of India’s digital transactions is that it comprises a large number of channels, each channel having its plus and minus points.

          Let us wait and watch for the ADF rollout.
Malaysia’s central bank to improve the payment infrastructure in the country, set up the Market Development Fund (MDF) in 2015, under which credit card scheme providers can contribute by channeling 0.1% of each payment card transaction.

          Acceptance Development Funds have been successfully deployed in several countries, including Indonesia and Poland too.

Tuesday, March 26, 2019

Reserve Bank of India to unveil Regulatory Sandbox in the next two months

          At 25th March, 2019,  NITI Aayog’s FinTech Conclave’s Keynote Address Shri Shaktikanta Das, Governor, Reserve Bank of India, mentioned about the need for Regulatory Sandbox.

          The theme of the keynote address is “Opportunities and Challenges of FinTech”


 The Reserve Bank’s working group on FinTech and digital banking (Report of the working group on FinTech and digital banking, November 2017) suggested the introduction of a 'regulatory sandbox/innovation hub' within a well-defined space and duration to experiment with FinTech solutions, where the consequences of failure can be contained and reasons for failure analysed. A ‘Regulatory Sandbox’ would benefit FinTech companies by way of reduced time to launch innovative products at a lower cost. Going forward, the Reserve Bank will set up a regulatory sandbox, for which guidelines will be issued in the next two months.


          In simple terms, Sandbox is an isolated environment in which new approaches can be tested before releasing for Live use.

          Developers can run their test-cases in a controlled environment to observe the IT Applications behaviour and fine-tune for live use.

Sandbox is a special security feature which allows you to run potentially suspicious applications automatically in a completely isolated environment. Programs running within the sandbox have limited access to organisation files and system, so there is no risk to your computer or any of your other files.

Regulators in major financial markets have established regulatory ‘sandbox’ or testing environment for furthering financial technology and adoption

SEBI in mid-2017 set up a ‘Committee on Financial and Regulatory Technologies (CFRT)

One of the committee’s objective is to finalised the ‘Approach  and  framework  for  regulatory  sandbox  in  Indian  market  conditions  to  facilitate adoption of FinTech and promote financial innovations’.

IRDA in late 2018 set up a committee to frame guidelines on ‘Regulatory Sandbox’, in Insurance space in India. The committee has submitted its key recommendations to IRDA. IRDA in turn has sought feedback from general public before releasing the final guidelines.

The Insurance Regulatory Sandbox would have defined entry and eligibility criteria, boundary conditions, process flow, timelines and success factors / exit parameters for the applicants, along with appropriate controls for protection and risk management.
The above terms will be common to Finance Regulatory Sandbox and Stock Market Regulatory Sandbox.

The word ‘Regulatory Sandbox’, is also mentioned in ‘Report of the Working Group on FinTech and Digital Banking’, submitted to Reserve Bank of India in November 2017.

On of the committee’s key recommendations is:

In view of IDRBT’s unique positioning as a research and development institute, and as indicated by some of its activities, it is felt that IDRBT is well placed to create and maintain a regulatory sandbox in collaboration with RBI for enabling innovators to experiment with their banking/payments solutions for eventual adoption.

The Institute may continue to interact with RBI, banks, solution providers regarding testing of new products and services and over a period of time upgrade its infrastructure and skill sets to provide full-fledged regulatory sandbox environment. The Reserve Bank of India may actively engage with the Institute in this regard.

Saturday, March 23, 2019

State Bank of India invites General Public for its SBI Fintech Innovation Incubation Program

          State Bank of India is keen to deploy cutting edge technologies to assist its account holders and staff to experience Safe Digital Banking, across all its product       

As on date, SBI has two Innovation campuses :

1) GITC : SBI Global IT Centre, CBD Belapur, Navi Mumbai.

2) SBIIT : State Bank Institute of Innovation and Technology, Road no 12, Banjara Hills, Hyderabad

The innovation centre is housed in SBI Global IT Centre, CBD Belapur, Navi Mumbai. The innovation centre is spread over 15, 000 sqft  with an investment of 100 crores.

In the long run, SBI plans to allocate 5 percent of IT budget for innovation. The Innovation Centre will have 30  members to oversee the programs.

State Bank of India has also a dedicated campus at Hyderabad specialising in Innovation and Technology.

Initially SBI will offer its fintech incubation program at its Navi Mumbai and Hyderabad Innovation campuses.

The innovation program is an ongoing one and Developers, Startups, Entrepreneurs (individuals or teams) having Fintech based innovative idea on emerging and new technologies are encouraged to apply through the Application provided on the webpage.

The selected candidates will join hands with SBI to be self-reliant and incubate novel technology and business ideas into viable commercial business products.

The whole program is split into two parts i.e

Part 01) __ Idea Modelling – 2 months
Part 02) __ Prototype Development – 10 months

The selected candidates are expected to sign a Non-Disclosure Agreement and other documents specified by the Bank at the time of on-boarding into the program.

Incubatee shall offer Restricted IPR on the product developed under the program by signing Restricted IPR agreement by the Incubatee/Startup Company.

The applicants can seek any clarification on the guidelines by dropping a mail to

State Bank of India has made it very clear that all communications related to the scheme including announcements of shortlisted applicants and final selection of applicants will be sent to the applicants directly and will not be made available on this website.

Interested to be part of “SBI Fintech Innovation Incubation Program’, than follow the below process:

Apply - Interested individuals or team can apply by sending their application with full details on the form available on the link below.

Selection - The applicant of shortlisted entries will have to make a presentation on their idea/ solution to the Selection Board of Bank at GITC, Belapur, Navi Mumbai/ SBIIT Hyderabad as per the decision of the Bank.

On selection of the applicant’s idea/ solution the incubatee will be assigned an incubation mentor to assist the incubatee.

Post Selection - The incubatee should prepare project report covering Scope of Work, Timeline and milestones, Details of expenses and infrastructure etc.

The major differentiator between SBI Incubation program and other incubation programs is that this is on-going program and applicants can apply at any time.

Monday, November 26, 2018

Kumbh Mela @2019 – Visitors can access WiFi Hotspots

          The administrative authority of Kumbh Mela 2019 : Prayagraj Mela Pradhikaran has released ‘Expression of Interest’, document for providing Wi-Fi hot spots in KumbhMela – 2019.

          Kumbh is one of the world's largest religious gatherings and is held on a rotational basis in either of the four riverside towns of Haridwar, Allahabad, Nasik and Ujjain. The MahaKumbh is held every 12 years at Prayag (Allahabad), with the Kumbh being organized every 6 years.

The last MahaKumbh took place in 2013 which was attended by an estimated 10 crore people over a two-month period. The next Kumbh is scheduled to be held in Allahabad in 2019.

The estimates for Kumbh 2019 is 12 crore visitors from all parts of the world.  Looking at the modern day dependence on internet services, good quality optical fibre wireless internet services is planned to be provided in the Kumbh Mela 2019.

Prayagraj Mela Pradhikaran proposes to appoint an agency to provide good quality and high speed wireless internet services inside the Kumbh Mela Area in every sector for the period of Three (3) months.

Draft Scope of Work

·       The PrayagrajMelaPradhikaran intends to engage a service provider who can supply, configure, install, operate, and maintain good quality wireless internet service inside the KumbhMela area to an agency for 3 months (January - March 2019). Agency may make revenue by collecting tariffs and advertisement. The Agency shall be responsible for following work:

·       Agency shall install sufficient supporting infrastructure to provide seamless wireless internet connectivity throughout the Kumbhmela area, these might consists of but not limited to optical fibre, access switches, wireless access points, security equipments etc.;

·       Agency shall install operate and maintain wireless internet services;

·       The service provider shall be bound to pay all taxes/liabilities imposed by the Government or
·       any other Competent Authority in respect of the right of license;

·       Agency shall ensure 24x7 wireless internet service for KumbhMela period;

·       Agency will ensure 100% power back up for supporting infrastructure;

·       Agency shall incur all the costs and tax liabilities related to this project;

·       The service provider would be responsible for maintaining the user and other records as required under the applicable law/regulations;

·                Provide free service for a limited time period each day and later on can be charged as per defined by the Authority; and

·                 The agency shall adhere to TEC, DOT, TRAI or any other relevant or applicable guidelines

A WiFi hotspot is simply an area with an accessible wireless network. The term is most often used to refer to wireless networks in public areas like airports and coffee shops. Some are free and some require fees for use, but in either case they can be handy when you are on the go.

WiFi hotspots are becoming very common in India now and majority of laptop users are familiar with WiFi hotspots.

Tips for a safe surfing experience

Tip 01) Pick up the correct network

Tip 02) Pick a secure network

Tip 03) Ask to connect

Tip 04) Be your own hotspot

Tip 05) Use a VPN (Virtual Private Network)

Thursday, November 8, 2018

Amazon Pay to be India’s first interoperable Wallet

          Reserve Bank of India vide Notification No RBI/2018-19/61 DPSS.CO.PD.No.808/02.14.006/2018-19 dt. October 16, 2018 issued guidelines regarding ‘Interoperability Prepaid Payment Instruments (PPIs)’.

Q) What is Interoperability?

Ans: Interoperability is the technical compatibility that enables a payment system to be used in conjunction with other payment systems.

          Interoperability allows PPI Issuers, System Providers and System Participants in different systems to undertake, clear and settle payment transactions across systems without participating in multiple systems.

          Amazon Pay has kick-started the process to be offer interoperability to its wallet holders by tying up with Axis Bank.

          @apl  will be Amazon Pay’s UPI handle. The testing for interoperable launch is in progress with a CUG. Based on the feedback from the CUG users, Amazon Pay will fine-tune the compelte process.

          The date for the public launch is not in public domain.  However, the public launch will be in the near future

7 Benefits to Amazon Pay on this new business opportunity

Benefit 01) The first mover advantage

Benefit 02) Enable Amazon Pay to quickly onboard new merchants with UPI as the key differentiator

Benefit 03) Enable Amazon Pay to acquire a high number of customers through attractive cashback offers

Benefit 04) Enable Amazon Pay to save considerable costs associated with API integration on multiple eCommerce Sites. Amazon Pay wallet users can seamlessly transact with all the UPI handle users without any additional cost.

Benefit 05) More visibility for Amazon Brand across online as well as offline channel.

Benefit 06) Increase in the average balances held by wallet holders in Amazon Pay PPIs

Benefit 07) Increase the pressure on peers to quickly adopt wallet interoperability.
Q: What are the requirements for PPIs to achieve interoperability through UPI?

Ans: Requirements for achieving interoperability through UPI

1 PPI issuers shall facilitate all basic / standard features of interoperability of UPI.

2 PPI issuers shall act as Payment System Providers (PSP) in the UPI. NPCI will issue handle to the PPI issuers as per its policy / guidelines taking risk management aspects into consideration. Since *99# USSD is part of UPI, non-bank PPI issuers are also allowed to participate in the same.

3 PPI holders shall be on-boarded for UPI by their own PPI issuer only. PPI issuers shall only link their customer wallets to the handle issued to them.

4.PPI issuers as PSP shall not on-board customers of any bank or any other PPI issuer.

5 Authentication will be completed by the PPI holder as per his / her existing wallet credentials. In other words, a transaction will be pre-approved before it reaches the UPI.

6.  Settlement: For the purposes of settlement, a non-bank PPI issuer shall participate through a sponsor bank. Non-bank PPI issuers shall adhere to the requirements of sponsor bank arrangement in UPI as also meet all requirements of NPCI in this regard.

Additional Reading

RBI Guidelines For The Interoperability Of Prepaid Payment Instruments: A Boost For Digital Wallets?
Now Transfer Money From One E-Wallet To Another As RBI Kickstarts Interoperability


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