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New Umbrella Entities (NUE) – Way Forward for Digital Payments

New Umbrella Entities (NUE)  – Way Forward for Digital Payments

New Umbrella Entities (NUE)  – Way Forward for Digital Payments


New Umbrella Entities : Way back in 2003 I had to really haunt merchants from Colaba to Peddar Road to install EDCs (Electronic Data Capture) PoS machines at their cash counters. As I represented HDFC bank then for their payments business. Little did anyone knew then about the huge proposition this would metamorphose into and will be synonymous with now widely accepted and nomenclature as “Digital Payments” or “Cashless”.

Since my return from UAE after 15 years the two things Im happy boasting about India is the success of the “National Literacy Mission” & “Financial Inclusion” run. The digital payments business on the GO has also empowered the payor/consumer to be in control of his/her outgoings and in a way lessened the onus on the merchants.

Now hordes of apps & interfaces are available for cashless payments. It however started with PayTm (Payment Thru mobile) in 2010, a Noida headquarted company initially dealing with recharges & DTH payments. Slowly then into e ticketing, education fees, utilities, ecommerce payments and now micro wealth management platforms.

 Aadhaar Payment app, the UPI app, and the Bharat Interface for Money (BHIM) app developed by the National Payments Corporation of India (NPCI) are being encouraged by Indian government for digital payments apart from private players apps like Paytm, Mobikwik & FreeCharge.

The sector is experiencing an unprecedented jump in growth since November 2016, when the government demonetized high currency bills (Rs 500 and 1000) – which represented 86 percent of India’s cash in circulation. By February 2017, digital wallet companies had shown a growth of 271 percent for a total value of US$2.8 billion (Rs 191 crore).

Prior to the sudden developments in 2016 enabling the massive disruption in India’s payments landscape, a Google-BCG Report estimated that India’s digital payments industry would grow to US$500 billion by 2020, contributing to 15 percent of the country’s GDP. An important driver of this growth is India’s vast smartphone user base – the second largest in the world.

The Indian Digital payments industry currently stands at INR 2,153 Tn (~961% of GDP) and will grow at 27% CAGR to reach INR 7,092 Tn (~2278% of GDP) by FY25.

In simple terms potential 800 million mobile payment consumers.

So this SIZE needs a bigger entity to operate from within.

And hence,

Private players are keen to set up New Umbrella Entities (NUE). NUEs an idea floated by Reserve Bank Of India (RBI). NUEs will be an alternate route to the existing  National Payments Corporation of India (NPCI).

  • NUEs will be a non-profit entity that will set-up, manage and operate new payment systems, especially in the retail space such as ATMs, white-label PoSAadhaar-based payments and remittance services.
    •  New payment methods, standards and technologies will be brought to the fore by NUEs
    • NUEs operate clearing and settlement systems, identify and manage relevant risks such as settlement, credit, liquidity and operation and preserve the integrity of the system.
    • Monitoring retail payment system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system and the economy in general.

Why NUEs:

Presently, the NPCI, which is a non-profit entity, owned by banks is the one stop shop for all retail payments system.
It operates settlement systems such as UPIAEPSRuPayFastag, etc.

Players in the payments space have indicated the various pitfalls of NPCI being the only entity managing all of retail payments systems in India.

Hence to Increase Competitiveness, RBI  plans to allow other organisations to set up umbrella entities for payments systems with an aim to expand the competitive landscape in this area.

Players planning to establish these NUE aim to get an even larger share in the digital payments area.

  • Framework Related to NUEs:

    • Ownership & Control : The promoter or the promoter group for the NUE should be ‘owned and controlled by residents’ with 3 years’ experience in the payments ecosystem.

      •  Diversified shareholding pattern Any entity holding more than 25% of the paid-up capital of the NUE will be deemed to be a promoter.
    •   Minimum paid-up capital of Rs. 500 crore to set up NUEs.

      • No single promoter or promoter group should have more than 40% investment in the capital of the entity.
      • A minimum net worth of Rs. 300 crore should be maintained at all times.
    • Governance Structure: The NUE should conform to the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed on its board.

      • The RBI has the right to nominate a member on the board of the NUE & also to approve the appointment of directors.

Paytm Payments Bank (PPB) plans to expand into cross border & domestic remittances. The NUE proposed by the PPB and other investors will change the pace of digital payments in India if approved.

PayTm has become the largest enabler of digital transactions in India at 970 million in March 2021. It has also become the largest digital only bank with 64 million bank accounts and deposits over 3200 crores.

The initiative reminds me of AMER247 centres set up in the UAE in 2017. A semi government initiative it catered to the idea of establishing service centers of specialized services, in cooperation with the private sector to accomplish all Government department and federal transactions. AMER247 allows residents to complete all Visa and Residency transactions under one roof. Amer centers were launched by Dubai Govt to simplify transactions and increase efficiency to achieve customer happiness.

However digital payments was not the flavour.

Data source :,,,,,

*The author is founder at Elaf Consultants, investment consultancy firm. She can be contacted on [email protected] for business enquiries and comments.