India to witness digital payment foray; Tata and Reliance to compete for NUE

New Delhi: Business giants are all set to use the fast-growing digital payment and e-commerce sector of India. Reliance, Tata, Paytm, Facebook, ICICI, Kotak Mahindra, HDFC, VISA, Mastercard are in the foray to shift into New Umbrella Entity (NUE), the newly-introduced payment system of RBI.

What is NUE?

NUE(New Umbrella Entity ) are for-profit and not-for-profit companies that work in the retail payment sector. RBI had issued the guidelines for the functioning of such companies in August last year. These firms will have the authority to set up ATMs, implement POS payment and Aadhar-based payment, and develop new payment methods.

Who can initiate NUE?

Indian citizen-owned companies with three years of experience in the digital payment ecosystem can initiate NUE. In such companies, one promoter cannot hold more than 40 per cent of the whole capital. Thus, a minimum of three stakeholders will be the heads of an NUE. Such entities could also elicit foreign investment. Having a minimum paid-up capital of Rs 500 crore is a prerequisite for being eligible to initiate NUE.

Why the frenzy over NUE?

Digital payment systems and e-commerce is growing rapidly in India. These business houses aim to grab the opportunity and use it effectively. As of now, there are four consortiums of firms who are in the row to try a hand. The first consortium includes Amazon, VISA, ICICI Bank, Axis Bank, two start-ups and BillDesk. The second consortium is headed by Reliance Industries along with tech-giants Facebook and Google. The third consortium, under Paytm, consists of Ola and other companies. Headed by Tata Group, the fourth consortium includes MasterCard, Bharti Airtel, Kotak Mahindra and HDFC.