The Trade Receivables Discounting System (TReDS) has long enabled MSMEs to monetise invoices through competitive bidding by financiers. But the five licensed platforms operated in isolation: an MSME registered on one platform could only be seen by and receive funding from financiers on that same platform, blocking cross-platform bids and liquidity.
This fragmentation created a natural oligopoly. Three players—RXIL, M1xchange, and Invoicemart—captured 90% of the market, while smaller platforms struggled to build critical mass. Network effects favoured the incumbents, and MSMEs had little choice but to accept the terms offered by a limited pool of bidders.
The RBI's intervention addresses this structural lock-in. The central bank has now issued a process note to enforce interoperability across all TReDS platforms. Once live, an invoice uploaded by an MSME on any platform will be visible to and fundable by financiers across all connected platforms, mirroring the open-access model that defined UPI's success in payments.
Interoperability will intensify competition among lenders for the same invoices, driving down bid prices and reducing the cost of capital for cash-strapped small businesses. It also opens the door for smaller platforms and new entrants to participate meaningfully in the market without requiring pre-existing scale.
The move reflects a deliberate policy choice: India's regulators are using open network standards to counter digital monopolies, favouring utility models over closed ecosystems. TReDS interoperability signals that the RBI views network connectivity as essential infrastructure for credit distribution, not optional technology.
