The Reserve Bank of India (RBI) has permitted, w.e.f. September 2019, electronic mandate (e-mandate) for transactions up to Rs. 2000. With this, the FinTech industry players are optimistic that the processing of electronic mandate on cards for recurring transactions (merchant payments) will also be extended to allied payments methods, viz. UPI. They also anticipate that the cap on such transactions will subsequently cross the current Rs. 2,000 limit. Following the receipt of requests from financial industry stakeholders to permit processing of e-mandate on cards for recurring transactions with Additional Factor of Authentication (AFA) during e-mandate registration, first transaction, and simple &/or automatic subsequent successive transactions, the RBI considered allowing e-mandate.Continue reading “RBI Permits E-Mandates – What’s in it for FinTech India?”
The advent of financial technology (FinTech) brought about considerable efficiency, transparency, and accountability in the functioning of the banking and finance industry. Banks began welcoming and cooperating with their FinTech disruptors to manage technology trends such as Cloud, Mobile, and Blockchain to survive in a market powered by disruptive technologies. Amazon Web Services (AWS) adoption for FinTech has also led to these banking and finance companies accelerate lowering their costs immediately.
Micro, Small and Medium Enterprises (MSMEs) have long voiced their discontent concerning access to credit (traditional banking systems), and also about encountering rampant operational inefficiencies. According to a recent report titled, “Credit disrupted: Digital MSME lending in India,” by the Omidyar Network and Boston Consulting Group (BCG), MSMEs still find it cumbersome to access formal credit as nearly 40% of lending is taking place via informal sources; with total MSME credit demand estimated in the report being Rs. 45 lakh crore, Rs. 25 lakh crore are to be offered via formal (credit) channels (borrowing via proprietor name—Rs. 10 lakh crore—or via entity name—Rs. 15 lakh crore), Rs. 20 lakh crore are to be financed via informal (credit) channels (as reported by The Hindu Business Line).
In the midst of the entire digital money versus cash money saga rests the core trigger of the seemingly apparent decline of the physical money. As experts, researchers, and analysts have time and again opined, this (so far) unavoidable trigger is “the cost of cash.” Therefore, it’s obvious that containing cash costs is a must for financial institutions to position themselves competitively in the market. Along with this, it is also necessary to promote cash efficiency and decrease the costs of cash operations.
The Reserve Bank of India (RBI) recently released the “Payment and Settlement Systems in India: Vision 2019 – 2021” (Vision 2021), with its central theme being, “Empowering Exceptional (E)payment Experience.” The vision document envisions achieving “a highly digital and cash-lite society” via the framework of the 4Cs: competition, cost-effectiveness, convenience, and confidence.