Interoperable Payment System For Net Banking To Be Launched This Year: RBI

Reserve Bank of India (RBI) governor Shaktikanta Das on Monday (March 4) said an interoperable payment system for net banking is likely to be launched in 2024, which will facilitate quicker settlement of funds for merchants.

Speaking during the Digital Payments Awareness Week celebrations on March 4, Das said the central bank has granted the approval to NPCI Bharat BillPay Ltd (NBBL) for implementing such an interoperable system.

“We expect the launch of this interoperable payment system for internet banking during the current calendar year. The new system will facilitate quicker settlement of funds for merchants,” Das said.

For context, Bharat BillPay is an integrated ecosystem which connects banks and non-banks in bills aggregation business, billers, payment service providers and retail bill outlets.

The RBI governor said that the launch of the interoperable payment system will boost user confidence in digital payments. 

Das said that while internet banking is a preferred channel for payments like income tax, insurance premium, and mutual fund payments, such transactions processed through payment aggregators (PAs) are not interoperable currently. As a result, a bank is required to separately integrate with each PA of different online merchants.

“Given the multiple number of payment aggregators, it is difficult for each bank to integrate with each PA. Further, due to the lack of a payment system and a set of rules for these transactions, there are delays in actual receipt of payments by merchants and settlement risks,” he added.

The announcement of the interoperable system is a part of the RBI’s ’Payments Vision 2025’. According to the document, the central bank plans to bolster the number of digital payment transactions by more than three times by 2025 and curb the volume of cheque-based payments to less than 0.25% of the total retail payments. 

The nod comes at a time when the RBI has given PA licences to a number of entities in the recent past. It has granted PA licences to 10 applicants in 2024 so far, including Amazon Pay, JusPay, Stripe, Tata Payments, and Mswipe.. 

In this speech, Das also said that digital transactions in India grew to 14,726 Cr in 2023-24 (till February 2024), a 90X jump from 162 Cr transactions in 2012-13.

This has led to India accounting for nearly 46% of the world’s digital transactions, Das said. He attributed this jump to the increase in adoption of unified payments interface (UPI). 

“The share of UPI in digital payments has reached close to 80% in 2023. At a macro level, the volume of UPI transactions increased from 43 Cr in 2017 to 11,761 Cr in 2023,” he said. 

It is pertinent to mention that the number of UPI transactions surged almost 60% to a record 11,768 Cr in 2023 from 7,404.45 Cr in 2022. The total value of UPI transactions also zoomed over 40% year-on-year (YoY) to INR 182.84 Lakh Cr last year.

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