Private sector lender IDFC First Bank has joined hands with country’s largest association of MFIs Sa-Dhan and Delhi-based fintech solutions provider NextGen in a bid to bring digital micro finance solutions to millions of feature phone 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 was so far excluded from the digital payments landscape. IDFC Bank is the partner bank in 123PAY. 

A key capability to enable here is the UPI integration – enabling simple 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 will 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.  

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 possesses 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.” said Jiji Mammen, ED & CEO, Sa-Dhan.