RBI Guidelines on “On-tap Authorisation of Payment Systems”

Soniya Khanna

22 Oct, 2019

Recently on 15^th October 2019, RBI issued guidelines on “ On-tap Authorisation of Payment Systems.”  The main aim behind the introduction of these guidelines is diversification of risk and to encourage innovation and competition. Under this, RBI described minimum net-worth criteria for retail payment systems. Earlier, on 21st January 2019 RBI released policy paper on Authorisation of New Retail Payment Systems, stating liberal entry points under this segment for new entrants. As we know for creation of a reliable payment ecosystem, non-banks are playing vital role.

Now, we are going to underline the highlights of the circular;

An offering of On-tap Authorisation

RBI is going to offer on-tap authorisation to the below mentioned:

1. Bharat Bill Payment Operating Unit (BBPOU)

It is a platform for recurring bill payments. At present, BBPOU covers five segments, such as electricity bill, telecom bill, direct-to-home (DTH), gas, and water bills.

• Trade Receivables Discounting System (TReDS)

It facilitates the financing of MSME invoices and bills drawn on corporate buyers by way of discounting by financiers. Under this participants may take benefit of uninterrupted services for discharging functions.

For more details on TReDS, you can read this article: Know Everything about Trade Receivable Discounting System

1. White Label ATMs (WLAs)

Set-up by the non banking entities

Net Worth & Eligibility Criteria – On-tap Authorisation of Payment Systems

RBI decided net worth criteria for entities who wish to function, operate, or provide platforms for the following:

Authorization Requirements

The authorization will be based on the following factors:

1. Merits of the Proposal
2. In respect of additional entities, RBI’s assessment of potential
3. An application shall be made to

Other Requirements

• The payment system operators should make sure interoperability among different Retail Payment Systems;
• For retail payment systems, the KYC requirement shall be as per the KYC master directions issued by the Department of Banking Regulation (DBR), RBI.

The facts, as mentioned above, are based on the press release issued by the RBI on “On-tap Authorisation of Payment Systems” dated 15^th October 2019.