How to become a UPI TPAP?
To give context, ChintaMoney is a UPI TPAP (Third Party Application Provider) with Kotak Mahindra Bank as our PSP. List of all TPAPs in India: Click Here
Having a payments mechanism was core to the ChintaMoney use case. We believed that PFM needs to be connected with a high touch point activity for it to be relevant in the daily lives of people. And what better than payments to match this use-case.
Late 2017, UPI was in the market and growing, both me and Narahari, my co-founder, believed that this is what will be big in the future and we need it for ChintaMoney. After the success of PhonePe, a lot of companies were getting TPAP access, primarily through Yes Bank. We decided we should go for it and started contacting banks for the same. Do note, we had to incorporate a private limited company as banks needed to sign NDAs and they weren't willing to do so with individuals. I don't know the scenario now but this was the state back then,
After contacting various banks, primarily through network and LinkedIn, and getting exorbitant quotes, we finally settled with Kotak Mahindra Bank. The folks at Kotak liked our idea and were willing to give us a shot at a fairly reasonable pricing that a bootstrapped startup could afford. Signing the contract was the easy bit, now the real struggle began!
Q: How to get in touch with banks?
A: Use your network/LinkedIn and get in touch with the Product Manager that handles UPI/Fintech. Be ready with a business use-case pitch deck & volume estimates.
Various banks will have various criteria, mostly around projected volumes. So as long as one is clear with the business model and how many people can be onboarded, that should be fine.
There is most likely an upfront integration fee + monthly/annual maintenance fee. This was the structure back in 2018/19. It may have changed now, please contact me if you know of an updated structure.
- Integration Fee: ₹3 lakhs - ₹25 lakhs
- Annual Maintenance: ₹4 lakhs - ₹20 lakhs
Apart from that you will have to calculate your own development cost and cost for audits & insurance.
Again, this depends on how capable tech teams of the banks are. Banks like Yes Bank have a solid tech team and can do an integration fast, whereas other banks will take more time. (It took us 2 years to from signing agreement to go live with 2 full time engineers & 2 consultants)
Best case TTL: 8 months
Worst case TTL: 2.5 years
Contact bank and sign an agreement.
Pay integration fee.
Bank submits proposal/idea to NPCI.
Post clearance, bank shares UAT details
Develop app and integrate UAT SDK.
Get VPAT 3rd party Audit from CERT-IN empanelled auditor.
Get DLSAR 3rd party audit from CERT-IN empanelled auditor.
Bank's internal tech team will perform sanity testing & audit.
Resolve all audit issues and get clearance from Bank team and 3rd party.
Submit UAT app to NPCI and get it cleared from NPCI.
Get pre-production access from bank.
Be in pre-production and sort out issues if any.
Get Go-LIVE permission from NPCI.
Get production SDK from bank & integrate the same in your app.
Congrats! you are live
Should you become a TPAP?
As you must have read, being a TPAP is no joke, it is time-consuming, costly and will suck up your resources. Ask yourself the question, do you REALLY REALLY need it? Only if you can't survive without being a TPAP should you go down this path. If there is any other alternative like integrating with an existing TPAP or payment gateway or just reading SMS of a user, please try that!
Especially at an early stage it is very difficult. We are lucky we got investments at the right time and my team stuck together over these years that we managed to pull this off. Otherwise it would have been tough.
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