IDFC Bank, Sa-Dhan and NextGen collaborate to Offer Financial Solutions for Feature Phone Users

Leading private sector lender IDFC First Bank has joined hands with Micro Finance Institution’s association, Sa-Dhan and fintech solutions provider NextGen, in to bring digital micro finance solutions to millions of feature phone users in the country users, which is around 45 percent of the mobile phone using population and about 94 million beneficiaries under the MFI ecosystem.

The association is poised to facilitate the section of the society that uses feature phones and is considered excluded from the digital payments landscape. IDFC Bank is the partner bank in RBIs 123PAY systems which enable making transaction with a feature phones. A key capability to highlight here is the UPI integration that enable money transfers, bill payments, merchant payments, recurring payments and EMI collection. IDFC bank, with a vision to be a “digital first” bank, has partnered with NextGen to enable UPI on the NextGen 123Pay SIM overlay platform. 

“We as a digital first bank see a tremendous opportunity here to expand the UPI services on the untapped, un-banked and the under-banked user segment and this partnership with NextGen with their SIM overlay and the micro finance industry under Sa-Dhan, helps us reach and digitize the users” said a IDFC Bank spokesman.

NextGen founder, Taron Mohan, said, “With the 3-way partnership, come many additional benefits for the beneficiaries of the MFI ecosystem including UPI, banking and wallets, bill payments system, individual and merchant money transfers and an interface enabling raising requests of micro loans and insurance.”

NextGen intends to bring technical solutions like setting up an UPI Auto pay platform for regular EMIs as an auto pay function, riding on the UPI 123Pay service platform with NPCI.  

"Micro finance institutions have their presence in over 600 districts in India and there is a need to bring in technology-based solutions to reduce the operational costs for these institutions and enable easy finance availability in tier two and tier three cities / rural areas of India. In order to enable this solution, we must target the whole gamut of humble feature phone users," Mohan added.

Sa-Dhan has over 150 MFI institutions under its umbrella and their collective grievance is handling of cash collection against the EMI’s. Since most of these MFI clients do not possess a smart phone, digital payment becomes difficult in this segment. Hence, there is an immediate need for cohesive digital EMI collection solution to reduce their overall operational costs through non-smart / feature phone segment, explained Taron. 

"Digitization in collections in microfinance sector has been a great challenge as most of the MFI clients do not possess smart phones. In this connection the association with NextGen and IDFC First will help in developing a new payment and collection system by using feature phone with the technological intervention being provided by them. We see a great future for this initiative to bring this segment on the digital financial inclusion platform and achieving the Prime Minister’s digital mission." said Jiji Mammen, ED & CEO, Sa-Dhan. 

There are about 45 million Individual beneficiaries under the MFI organisations and of most of them are on feature phones. India has almost 400 million feature phones users.