New Umbrella Entity

NEW UMBRELLA ENTITY
Research Question 1). Links to all important news articles related to NUE, competition
against NPCI etc?
https://inc42.com/features/big-businesses-expected-to-apply-will-nue-make-npci-redundant/
https://timesofindia.indiatimes.com/business/india-business/fintech-execs-eye-new-e-pay-
entitys-licence/articleshow/79239168.cms
https://disruptive.asia/reliance-jio-fintech-firms-banks-nue-license/
https://www.medianama.com/2020/11/223-payment-industry-veterans-team-up-to-launch-entity-
for-nue-license/
https://www.lexology.com/library/detail.aspx?g=fe16e9c5-f885-4a48-91e7-a17a21932118
https://thedigitalfifth.com/new-umbrella-entity-nue-for-retail-payments-implications-on-
banking-ecosystem/
https://www.moneycontrol.com/news/business/startup/boon-or-bane-how-the-new-umbrella-
entity-for-retail-payments-has-split-the-industry-5767571.html
https://m.dailyhunt.in/news/india/english/inc42-epaper-
inc/with+big+businesses+expected+to+apply+will+nue+make+npci+redundant-newsid-
n232086022?pgs=N&pgn=8&&nsk=fintechcoverage-updates-fintechcoverage
https://www.bloombergquint.com/business/npci-its-nue-competitor-and-the-push-for-retail-
payments
https://yourstory.com/2020/02/rbi-nue-retail-digital-payments-new-umbrella-entity
https://gohash.in/npci-allows-payment-banks-and-fintechs-to-be-shareholders/
https://www.medianama.com/2020/10/223-deciphering-npcis-dominance-in-digital-payments/
https://bfsi.economictimes.indiatimes.com/news/policy/rbi-releases-framework-for-new-
umbrella-entity-a-new-journey-awaits/77626434
https://startuparound.com/read/1581482009.4355216/single.html
https://www.financialexpress.com/industry/banking-finance/hdfc-bank-may-join-race-to-set-up-
npci-rival/2096108/
Research question 2- What are the issues with cross border payments?
Links- http://euro.ecom.cmu.edu/resources/elibrary/epay/crossborder.pdf
https://fintech.bankingciooutlook.com/cxo-insights/crossborder-payments-challenges-and-
opportunities-as-fintechs-compete-with-banks-nwid-218.html
https://conference.afponline.org/docs/default-source/default-document-library/sp/global-and-
cross-border-payments-challenges-and-successes-session-23.pdf
1. Outdated operational systems
One of the biggest challenges banks face nowadays comes in the form of their messaging
infrastructure. The largest number of cross-border payments are processed with the help
of SWIFT MT103 messaging format, which is, putting it simply, a highly-reliable but rather
limited in terms of the amount of information it can carry. If you require some sort of additional
information, it will usually be sent to you by an MT199 message system. And anything above the
amount of MT103 and MT199 is will usually receive via email.
So, manual processing and non-automated messaging on both sides of the transaction are mainly
what are causing major operational inefficiencies for banks. All of the time consumed on
regulating those inefficiencies could have been spent on improving-value activities instead.
2. Slow payment processing
You probably already know that your payments can be stopped at any point in this long and
complicated payment path. This results in both delays and unsatisfied customer experience for
both parties involved.
The most common reasons for delays include incomplete payment information, AML checks and
fraud, and the need for sanctions conduct. Due to the serious lack of digitalization and
standardization in the sharing of this information your checks usually need to go through many
channels of complex communication.
This often happens to be manually intensive, only leading to further delays. If the case is simple,
your payment can be held for several hours, but if the situation is seriously difficult, your
payment can be stuck in the system for weeks.
3. Personal data privacy regulations
Various regulations on what information can or cannot be shared, not mentioning the reading
interpretations of those regulations only further complicate an already complex cross-boarding
process. Banks need to closely follow those regulations, investing a lot of their time trying to
organize what information can be transferred across different jurisdictions. Take Pakistan for
example: in this country, banks are not allowed to share any personal or business information of
their clients, even within different departments of the same bank.
4. Multi-currency and payment methods
Global ecommerce means accepting a variety of payment methods and currencies. Electronic
payments such as e-wallets, mobile payments, and credit/debit cards help online merchants
compete in international markets by allowing their customers to pay in their native currencies.
For merchants, multi-currency, cross-border transactions can require new bank accounts, new
business entities, and new regulatory hurdles in each national market. Selecting a payment
service provider with the necessary infrastructure already in place can provide effective, and
immediate, solutions to those problems. A merchant can easily collect payment in one currency
and credit the merchant account in its home currency.
Despite rapid market growth, international payments have been hampered by country-specific
regulations, while transactions being channeled through intermediary banks can take days to
complete and often come with fees.
Increasingly, payments providers are stepping in creating solutions that solve speed and security
issues for companies while maintaining seamless user experiences.
Knowing country-specific requirements can shorten timelines and ensure smooth transactions,
and that’s where third parties come into play.
Visa is one such provider that bridges information coming from the send market into what is
required in the receipt market. “For example, if, in a particular market, different transaction
limits apply for consumer versus business remittances, or for domestic versus cross-border
transactions, we can provide these custom controls. We don’t have a one-size-fits-all approach
— instead we build a lot of flexibility into Visa Direct,” said Vikram Modi, vice president and
head of Visa Direct Global Platform at Visa.
Blockchain and AI to the Rescue

Recent developments in artificial intelligence (AI) and machine learning (ML) have made more
solutions possible without causing slowdowns. Rather than relying on cumbersome human
analysis, AI allows firms to process thousands of transactions per day, resulting in faster,
stronger networks.
“Again, from [a] historical dataset, payment systems can learn the traffic patterns and provide
more computing power during certain periods to handle peak loads — and scale down their
infrastructure requirements during other times. This has a direct cost benefit as computing power
is used only on the basis of need,” said Nilesh Pathak, chief technical officer at InstaReM.
Some payments providers are also leveraging blockchain and distributed ledger technology
(DLT) to meet these needs, expediting the cross-border payment process.
Visa’s approach has been a cross-border payments platform called Visa B2B Connect that
processes payments directly with Visa’s partners in a single day rather than routing out of
network.
Mastercard has instead purchased cross-border transaction providers to expand its payments
networks and offer similar solutions. Canadian payments network Interac is also investing in
blockchain and DLT solutions.
While real-time settlement is commonplace in many European Union (EU) countries,

an international payment system that functions across all European borders — and beyond — has
yet to be realized.
If the EU is to be competitive against more monolithic economies like China and the U.S.,
payment systems will have to become more international in scope.
Since the start of the year, numerous cross-border payment partnerships have formed. Last
month, it was announced that Alipay had partnered with six European digital wallets to allow QR
code payments in the countries where the wallets are accepted.
B2B Takes a Cue from Consumers
Remittance and peer-to-peer (P2P) payment technologies have accelerated transaction speeds for
consumers tired of waiting days for money to move across borders. Increasingly, the financial
services industry is targeting slow speeds in corporates’ cross-border payments, too.
Solution providers like Ripple are introducing new ways to bypass the correspondent banking
system entirely through cryptocurrency, while others like the above-mentioned Visa B2B
Connect and SWIFT gpi, aim to transform it.
Beatriz Kissler, general manager of CaixaBank-owned GDS Cusa, told PYMNTS in an
interview that for the financial institution itself, these new services like SWIFT gpi, which the
bank recently joined, support cross-border payment optimization and will accelerate streamlining
of cross-border payments.

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NEW UMBRELLA ENTITY

1. Outdated operational systems

2. Slow payment processing

4. Multi-currency and payment methods

Blockchain and AI to the Rescue

While real-time settlement is commonplace in many European Union (EU) countries,

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