The National Payments Corporation of India (NPCI) has announced plans for a blockchain payments solution. The organization has 56 shareholder banks and was initially set up with support from the Reserve Bank of India and Indian Banks Association. Will the blockchain system be used for domestic purposes or remittances and does this impact Facebook’s India remittance plans?
According to Business Today, the organization issued a notification saying: “NPCI intends to develop a resilient, real time and highly scalable blockchain solution. It is proposed to develop this solution using an open source technology/ framework/solution.”
NPCI already looks after many domestic payment systems. For example, it runs RyPay the domestic Debit and Credit Card payment network of India. It controls the Unified Payments Interface (UPI) which is the instant, real-time settlement system. And it also created a UPI linked mobile app called Bharat Interface for Money (BHIM) that enables direct bank payments by using a persons UPI ID or scanning a QR code.
So the big question is will the blockchain system be used purely for domestic purposes or targeted at international payments? India is the world’s largest destination for remittances. The World Bank estimated that for 2018, India accounted for $79 billion of the $689 billion global remittance market. Remittances are classified as small consumer payments.
Facebook is rumored to be targeting its first blockchain solution as remittance payments to India. Once users send digital money from a foreign country to India, they need to be able to use the money. Hence unless Facebook’s coin is widely accepted, including at retail outlets, there needs to be an offramp. And that’s likely to need to interface with one of the NPCI systems.
Another example of integration is in the Philippines which is the fourth biggest destination for remittances (2018: $34 billion). A week ago Western Union announced that users could send money from Western Union and receive it in their Coins.ph app. The Coins.ph cryptocurrency application has proven popular with five million customers using it.