Page 206 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

In recognizing these concerns, the IWG report encouraged financial regulators to ensure that operators of
payment infrastructures develop risk-based, objective criteria for direct access. At the same time, the IWG
176
recognized that it may be infeasible for many PSPs to comply with the financial and technical requirements
for direct access; and that governance arrangements may create barriers to cost-effective indirect access.
Therefore, the report recommends that payment system regulators work to ensure that PSPs can access
payment services – whether through direct or indirect access – under FRAND conditions.

9.3 Country examples

Colombia

Although a new law on financial inclusion was passed, it did not take fully into account the need for non-
banks to access national payment infrastructures or to have access to payment switches on FRAND terms. In
particular, the ability for non-bank DFS SPs such as MNOs to distribute companion Visa and MasterCard General
Purpose Reloadable (GPR) cards has been somewhat limited by the fact that the access is tightly controlled
by two local franchises.

India 177

Several payments systems are operational in India. These include the Real Time Gross Settlement (RTGS)
system, National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS), Aadhaar Enabled
Payment System (AEPS) and Unified Payments Interface (UPI). The RBI, which is the banking and also the
178
payments regulator, operates RTGS and NEFT payment systems. The National Payments Corporation of India
(NPCI) operates IMPS, AEPS and UPI. In addition to operating the payment systems, NPCI has also been
authorized to operate as a central unit for new centralized bill payment mechanism: Bharat Bill Payment System
(BBPS). Non-banks can access NPCI systems only with/through banks. 179

The gamut of services offered by NPCI has made it a dominant player in several services - such as card payments -
and the exclusive player in many. It is thus the only entity authorized by RBI as a retail payments organization,
180
which allows it to set standards, access criteria and service pricing. This has raised concerns that NPCI is
increasingly turning into the exclusive service provider-cum-quasi regulator for payments systems in India.
The Financial Sector Legislative Reform Commission Working Group on Payments for example has called for
a level playing field within the payments industry and between bank and non-bank players. A recent report
181
from the Indian Ministry of Finance – known as the Watal Committee - made similar recommendations. 182

176 ITU DFS FG (2016c) ibid
177 All data in this section provided to the TIC WG by Consumer Unity & Trust Society (CUTS) India. See CUTS (2016c) Competition
And Regulatory Concerns In Payment Systems Ecosystem In India: Brief Note Based On Initial Literature Review, available at
https:// goo. gl/ cb090G
178 Gandhi, R (2016) Evolution of payment systems in India – or is it a revolution?, available at http:// www. bis. org/ review/ r161025f.
htm
179 Ministry Of Finance (India) (2016) Committee on Digital Payments: Medium Term Recommendations to Strengthen Digital Pay-
ments Ecosystem, available at https:// goo. gl/ cb090G
180 RBI (2016) Certificates of Authorisation, available at https:// goo. gl/ 14LHgS
181 FSLRC (2013) Report Of The Working Group On Payments, available at https:// goo. gl/ PI4Zkt . See also Srikanth, L (2016) UPI Is A
Toll Road, available at https:// goo. gl/ 150ofa
182 Ministry Of Finance (India) (2016) ibid

182