CCAvenue, the premier payments brand of Infibeam Avenues Limited (IAL), has emerged as India’s first payment gateway player to process Central Bank Digital Currency (CBDC) or Digital Rupee (e-rupee) transactions for online retail merchants.
- CBDC is a robust, efficient, trusted, and legal tender-based real-time payment option.
In an industry- first move, CCAvenue has processed CBDC transactions for IDFC First Bank, one of India’s top private sector banks, enabling CBDC online transactions in an attempt to improve the country’s digital payments ecosystem.
Backdrop
i.On December 1, 2022, the Reserve Bank of India (RBI) launched a pilot for the e-rupee retail segment (e ₹-R) with four banks in four cities, including IDFC FIRST Bank.
ii.By introducing the digital rupee, the Indian government and RBI intend to reduce the Rs. 32 lakh crore worth of cash that is currently in circulation and minimize costs related to it, such as printing costs, the problem of fake currency, wear and tear, etc.
RBI’s CBDC Retail Pilot Project
i.The RBI has identified 8 banks for phased participation in the CBDC retail pilot project.
ii.The initial phase covers 4 banks in Mumbai (Maharashtra), New Delhi (Delhi), Bengaluru (Karnataka), and Bhubaneswar (Odisha): State Bank of India (SBI), ICICI Bank, Yes Bank, and IDFC First Bank.
iii.The pilot will be carried out in the second phase by Bank of Baroda (BoB), Union Bank of India (UBI), HDFC Bank, and Kotak Mahindra Bank, with the provision being extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
Infibeam Avenues Limited (IAL)
i.IAL is an Indian multinational financial technology (fintech) company.
- Founder & Managing Director (MD) – Vishal Mehta
- Founded – 2007
- Headquarters – Gujarat International Finance Tech-City (GIFT), Gandhinagar, Gujarat
ii.The RBI has granted IAL a Payment Aggregator (PA) licence, followed by a perpetual licence to function as the Bharat Bill Payment Operating Unit (BBPOU) under the Bharat Bill Payment System (BBPS).
iii.IAL’s ‘CCAvenue’ has launched innovative payment solutions to India, such as India’s first online card transactions, the first online Rupay debit card transaction, the first pin-on-glass solution for mobile, etc.,
IDFC First Bank & ToneTag Partner to Launch CBDC Payments
IDFC FIRST Bank has partnered with ToneTag, the world’s largest provider of audio-based solutions, in order to facilitate the acceptance of digital rupee at merchant outlets.
- This collaboration comes after the pilot launch of Central Bank Digital Currency (CBDC) for retail users by the Reserve Bank of India (RBI).
Backdrop
i.On November 1, 2022, the RBI launched its first pilot project to implement CBDC or Digital Rupee (e₹) in the Wholesale Segment (e₹-W) for secondary trade in government securities (G-secs).
ii.On December 1, 2022, the RBI launched its pilot project to implement CBDC or Digital Rupee (e₹) in the Retail Segment (e₹-R) with four banks in four cities, including IDFC FIRST Bank, after testing the wholesale CBDC.
CBDC in Retail Segment
i.The CBDC, like “cash,” will be primarily utilized for retail payments.
- The CBDC will function as a digital rupee in the retail segment (e₹-R), representing legal tender in the form of a digital token.
- It will be issued in the same denominations as paper currency and coins, and distributed through intermediaries, i.e. Banks.
ii.According to the RBI, consumers will be able to transact with e₹-R through a digital wallet issued by partner banks and stored on mobile phones or hardware wallets to facilitate person-to-person (P2P) and person-to-merchant (P2M) transactions.
iii.The e₹-R will continue providing physical safety, trust, and settlement finality.
- It can be converted into other forms of money, such as bank deposits, but it will not generate any interest, much like cash.
Key Points:
i.ToneTag will offer solutions that will allow merchants to accept digital currency in this pilot.
ii.India is now among the select few countries in the world to undertake this initiative and gain the benefits of digitizing cash.
iii.This will greatly reduce counterparty credit and liquidity issues, as well as improve the efficiency of payment and securities settlement.
Recent Related News:
On 18th December 2022, On the occasion of its foundation day, IDFC First Bank has introduced zero-fee banking for savings accounts, as it waives off charges for a range of 25 frequently used customer-focused banking services that are connected to savings accounts.
About IDFC FIRST Bank:
IDFC FIRST Bank was formed by the merger of erstwhile IDFC Bank and Capital First, a Non-Banking Financial Company (NBFC) on 18th December 2018.
MD & CEO – V. Vaidyanathan
Headquarters – Mumbai, Maharashtra
