INDIA UPDATE - Digital Cash Q4/2022

Q4 was a great quarter for Crunchfish #DigitalCash. The Offline #RetailPayments project for Reserve Bank of India (#RBI) in India has advanced from development and integration into pilot phase with external customers and merchants, using real money under supervision by RBI. Two partnership agreements were signed with payment platform providers.

Crunchfish in partnership with HDFC Bank and one additional Indian bank have been working together in a project to develop an Offline Retail Payments solution for Reserve Bank of India (RBI) and their Regulatory Sandbox*. HDFC Bank is India’s leading bank and was among the first to receive approval from RBI to set up a private sector bank in 1994. HDFC Bank has a banking network of 6,499 branches in 3,266 cities. The second bank in the project is one of the leading banks in India.

At the end of Q4 the project completed quality assurance, including a security audit with penetration test by an external security firm. A demonstration of the solution was performed for the RBI before the project advanced into pilot phase. RBI was very pleased with the demonstration and requested the two banks to include significantly more customers and merchants in the pilot, as the solution has big relevance and potential for India.?Customers and merchants are being onboarded both in the major cities of?India as well as in the hinterland. The pilot is scheduled to run for a period of four months, followed by a one-month evaluation by RBI. If successful, the pilot will provide basis for RBI’s guidance and regulatory support in providing Offline Retail Payments, based on Crunchfish Digital Cash platform, to the payment ecosystem of India.

The Reserve Bank of India announced a Concept Note on Central Bank Digital Currency (CBDC) for India in October 2022. The Concept Note explains the objectives, choices, benefits and risks of issuing a CBDC in India, referred to as e? (Digital Rupee). The e? will provide an additional option to the currently available forms of money. It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money. Based on the successful demonstration of the Offline Retail Payment solution, RBI has expressed an interest to also evaluate offline payment for the e?. Meeting will be set up with RBI during Q1 to explore this opportunity.

The project with one of the major e-wallets in India is still ongoing and part of the e-wallets development plans for 2023. The e-wallet app today requires online connectivity at startup and thereby needs to be redesigned to host offline payment capabilities. The redesign is planned to be completed during Q2 2023, whereafter integration of Crunchfish Digital Cash offline with Proxilink Bluetooth interaction will start.

The RBI project generates interest among several banks and payments services in India. Discussions and evaluations have started with a few banks. A partnership has also been entered with the payments platform provider Wibmo .

* The Regulatory Sandbox was established in 2020 by the Reserve Bank of India (RBI) to foster responsible innovation in financial services, promote efficiency and bring benefit to end users. The Regulatory Sandbox is a formal regulatory program for market participants to test new products and services with customers in a live environment, subject to certain safeguards and oversight. It allows the regulator, innovators, financial service providers and end users to conduct field tests to collect evidence on the benefits of new financial innovations, while carefully monitoring and containing their risks. To be approved access to the Regulatory Sandbox, the proposed financial service shall include new or emerging technology, or use of existing technology in an innovative way and should address a problem and bring benefits to consumers.