This December, the NPCI will celebrate its 15 year anniversary, but for the most part, many of us only became familiar with NPCI because of fintech and UPI. And that’s only in the last 7-8 years.
But today it’s much more than UPI. It might as well be the backbone of fintech in India and in many ways, the gatekeeper of fintech innovation. And this was on full display at the 2023 Global Fintech Festival (GFF) in Mumbai this past week.
The slew of product launches at the GFF showed just how much innovation is waiting in the wings. Startups are viewing NPCI’s role with a dual lens — not just as an enabler but also a large corporation, as its name suggests, which has its own revenue interests to follow.
We’ll look at this dual-edged role shortly, but after these top stories from our newsroom this week:
- EV Ownership Hurdles: EVs are here to stay but electric vehicle financing is still grappling with teething issues that have slowed adoption. What needs to change? Read in our World EV Day special
- Clipping The Flip: Can GIFT IFSC’s special provisions be the answer for startups looking to reverse flip to India? Here’s the answer
- Inc42 Financial Tracker: With profitability of startups under the microscope, this latest addition to Inc42 tracks the FY23 performance of startups and tech giants. Bookmark this for updates as and when financials are released
NPCI’s Fintech Universe
Pretty much all the major attractions at GFF in Mumbai were from the payments segment, even though there was a heavy presence of lending tech and embedded fintech or API products as well. But when it comes to payments, NPCI was everywhere.
With a lot of fanfare, it announced tie-ups with PepperMoney, FamX and PineLabs for prepaid cards, LivQuik for a payments ring, a forex card launched in association with CARD91, showed off its work in conversational payments with Amazon Alexa, and also took the first steps towards taking UPI to the US and the UK.
There was also a partnership to launch EV charging payments on the FASTag platform, and a cross-border bill payments service for NRIs. UPI also got upgrades, including conversational payments, NFC-based offline payment offerings, UPI Tap & Pay and, arguably the biggest game-changer, credit line on UPI. NPCI was the talk of the town online and offline.
Speaking at that launch, Infosys cofounder and non-executive chairman as well as former UIDAI chief Nandan Nilekani said that NPCI ecosystem has been transformational for India in its journey to a digital-first economy.
“As they use additional credit, get access to capital and build businesses, we are going to see a huge formalisation of the country over the next 20 years. This is only possible because of the digital public infrastructure,” he told the audience.
The new feature launches are part of the NPCI’s quest to take UPI to 10,000 Cr monthly transactions. With UPI recently achieving the milestone of 1,000 Cr monthly transactions in August 2023, all eyes are now on how the payments network scales up going forward. The addition of credit to UPI is likely to supercharge this growth.
NPCI Comes For Lending Pie
Credit line on UPI is the biggest elephant in the room when it comes to fintech startups.
Credit on UPI will essentially allow consumers to pay for transactions through credit but using the UPI interface. This works by connecting pre-sanctioned digital credit lines from banks through UPI apps and payments products.
The payment flow and UX will be the same as UPI right now, so familiarity is expected to drive customer acquisition and could also tackle the problem of low trust in loan products. This is a major disruption within the fintech ecosystem as payment apps can now leverage bank partnerships to enable credit lines on UPI.
This also allows many payment apps such as Google Pay and Paytm to enter the space that was vacated by prepaid payment instruments or PPI-based lending players, which also offered credit line products, last year. Indeed, Paytm and Google Pay are among the first to launch the ‘credit line on UPI’ service. We can expect UPI market leader PhonePe to join the duo soon.
