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Banks can now join UPI without becoming issuer


The National Payments Corporation of India (NPCI) has allowed banks who do not act as issuers in the payments ecosystem to join the Unified Payments Interface (UPI) platform. An issuing bank is one which enables a merchant transaction at the consumer’s end, while the bank facilitating it at the merchant’s end is called an acquiring bank.

While most major banks are engaged in both functions, those with a limited retail customer base would find it difficult to act as issuers. In a circular dated June 11, NPCI said it is doing away with the issuer requirement. “As a pre-requisite to on-boarding banks into the UPI ecosystem, member banks were mandated to certify themselves first as an issuer and only then as an acquirer. This was a limiting factor for some banks which are keen to join UPI but have no retail presence,” the circular stated.

Such banks cater to corporates and institutions and based on representations received from this category of banks, the proposal of allowing such banks with minimal retail base as acquirers only was placed before NPCI’s steering committee.

“The steering committee members assessed and accorded its approval in the next meeting held on January 25, 2018,” it added.

To be eligible under the acquirer-only category, banks need to fulfill certain conditions. They must have no retail customer base, and cater to corporates and institutions alone. They will not be able to acquire customers through any payment service provider (PSP) application or third-party applications. Also, these banks will extend only the “Receive money” feature to their customers.

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