Two entities — Natural Support Consultancy Services and Nucleus Software Exports — have begun testing their payments solutions under the Reserve Bank of India’s (RBI) regulatory sandbox framework, the central bank announced on Tuesday. While Natural Support has created a near-field-communication (NFC) based retail payments solution, Nucleus has developed an offline cash product to improve e-payments in rural areas, the central bank said.

The retail payments solution currently being tested under the sandbox are:

  1. Natural Support Consultancy Services Pvt. Ltd from Jaipur: NFC-based prepaid cards and point-of-sale devices, called ‘eRupaya’, to facilitate offline person-to-merchant transactions and offline digital payments in remote locations
  2. Nucleus Software Exports Ltd from New Delhi: Offline cash product called ‘PaySe’ which will focus on-boarding Self Help Groups (SHG) and digitising the SHG ecosystem to use the offline payments product

In August 2019, the RBI had released the framework for its regulatory sandbox whereby a set of companies would be allowed to develop and test their products under limited regulatory controls and supervision. The aim of creating the sandbox is test a “product’s viability without the need for a larger and more expensive roll-out,” while at the same time giving regulators “first-hand empirical evidence on the benefits and risks of emerging technologies and their implication,” it said.

In November 2019, the RBI had invited applicants who have built retail solutions in either mobile payments including feature phone based payment services, offline payment solutions or contactless payments, as part of the first cohort of the sandbox which is focused on retail payment. “The adoption of ‘Retail Payments’ as the theme is expected to spur innovation in digital payments space and help in offering payment services to the unserved and underserved segment of the population. Migration to digital modes of making a payment can obviate some of the costs associated with a cash economy and can give customers a friction-free experience,” it said.

In total, the RBI received 32 applications of which it has approved a total of six entities to begin testing their retail payments solutions as part of the sandbox’s first cohort. The remaining four entities will begin testing their in due course as commencement of the testing phase for the first cohort was delayed due to the COVID-19 pandemic, it said.