Two entities selected by RBI for test phase of retail payment cohort.

In order to boost digital payments in areas of no or low network by enabling transactions without the need to have a network connection the Reserve Bank of India on Monday had selected HDFC Bank and Precision Biometric India for the test phase of the retail payments cohort under its regulatory sandbox.

HDFC Bank, in partnership with Swedish firm Crunch fish has offered an offline retail payments solution which provides capability for the customer and merchants so that they can pay and receive in offline mode.

Additionally, Precision Biometric’s product enables biometric tokens that can be used for secure password-less authentication and additional factor authentication (AFA), instead of one time password (OTP). With this, they can access mobile banking. This solution combines public key infrastructure and biometrics to enhance security and user experience in digital payments space.

To add feather in the cap the central bank had announced the opening of the ‘on tap’ application facility for the retail payments cohort in 2021. The banker’s bank had allowed on-tap applications for closed themes to make upgrades to existing technology.

The RBI stated earlier “based on the experience gained from the first and second cohorts and the feedback from stakeholders, the ‘enabling framework for regulatory sandbox’ has been updated to include ‘on tap’ application facility for themes of closed cohorts” Thus, the ‘retail payments’ is now open for application.

Regulatory Sandbox is a framework that allows live, time-bound testing of innovations overseen by an innovator. The idea of sandboxing comes from the information technology sector, where new products are tested while database is isolated from critical system resources and the products has not necessarily gone live.

The three main financial regulators in India-Reserve Bank of India, Securities Exchange Board of India and Insurance Regulatory and Development Authority of India have an RS framework.

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