RBI Green-flags Interoperable Payment System For Internet Banking Transactions
The Reserve Bank of India (RBI) has granted approval to the National Payment Corporation of India (NPCI) Bharat BillPay Ltd to introduce an interoperable Internet banking payment system, as announced by Governor Shaktikanta Das on Monday. During a digital payments awareness event organised by the RBI, Das stated that the new system is expected to be launched this year and will facilitate quicker settlement of funds for merchants.
Internet banking has been one of the oldest channels for online merchant payment transactions, providing a favoured channel for payments such as income tax, insurance premiums, mutual fund payments, and e-commerce. However, the current system faces some challenges. Transactions processed through payment aggregators (PA) require banks to individually integrate with each PA of various online merchants.
According to Das, it is difficult for each bank to integrate with every PA, given the numerous payment aggregators. Moreover, due to the absence 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.
Das highlighted the rapid growth in retail digital payments in India, with transactions increasing from Rs 162 crore in FY13 to over Rs 14,726 crores in the current financial year until February. Das cited 2022 data, saying that India accounts for a massive 46 per cent of the world's digital transactions.
Das also pointed out the significant growth in India's flagship payment system, the Unified Payments Interface (UPI). He stated that the share of UPI in digital payments had reached nearly 80 per cent in 2023. Additionally, he said that the volume of UPI transactions had increased from Rs 43 crore in 2017 to Rs 11,761 crore in 2023.
