The Reserve Bank of India has said it plans to launch an interoperable payment system for internet banking this year.
In an address at the Digital Payments Awareness Week celebrations, the Governor of the Reserve Bank of India said the system will be introduced as part of its Payments Vision 2025 and will facilitate quicker settlement of funds for merchants.
“In our Payments Vision 2025, we had envisaged an interoperable payment system for internet banking transactions. In pursuance of this objective, we have given approval for implementing such an interoperable system to NPCI Bharat BillPay Ltd (NBBL),” he said.
This measure is also intended to further boost user confidence in digital payments and help continue its rapid rise in the country. Between March 2023 and January 31, 2024 the number of new UPI users added was 66.5 million people while the Reserve Bank’s Payments Infrastructure Development Fund (PIDF) has also further aided this growth, with an additional deployment of over 12 million digital payment touch points.
Speaking on the need for an interoperable payment system RBI Governor Shaktikanta Das said: “Internet Banking is one of the oldest modes for online merchant payment transactions. It is a preferred channel for payments like income tax, insurance premium, mutual fund payments, e-commerce, etc. At present, such transactions processed through Payment Aggregators (PAs) are not interoperable, i.e., a bank is required to separately integrate with each PA of different online merchants.”
He added: “As a result, if a customer wants to make payment from his bank account to a certain merchant, the merchant’s PA and customer’s bank must have an arrangement. Given the multiple number of payment aggregators, it is difficult for each bank to integrate with each PA. Further, due to 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.”
Digital Payments Awareness Week is a week long initiative designed to bridge the digital divide in India by increasing awareness about digital payments. In his address, the Governor also noted how the flagship of India’s payment systems, the ‘UPI’, has become the most talked about fast payment system not only in India but across the world. It remains the biggest contributor to the growth of digital payments in the country, reaching close to 80 per cent of digital payments in 2023.
