The Reserve Bank of India (RBI), for quicker settlement of funds for merchants, has asked NPCI Bharat BillPay Ltd. (NBBL) to implement an interoperable system for Internet Banking which should be introduced during the current calendar year.
“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 and e-commerce,” Governor Shaktikanta Das said while speaking at a function on the occasion of Digital Payment Awareness Week in Mumbai.
“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. 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,” Mr. Das explained.
“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,” he added.
Keeping in view these bottlenecks, the RBI as per its Payments Vision 2025, 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). 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,” he said.
The governor said this measure would further boost user confidence in digital payments. “As a regulator, we are committed to play our part in India’s journey in digital payments,” he added.
Mr. Das said, over the years, the RBI had not only navigated through the fast-evolving technological innovations but also played a pivotal role, as a catalyst, in developing one of the most modern payment systems in the world, be they large value, retail or fast payments. “This has been made possible by nurturing diverse payment systems in the country, namely, the bill payments, merchant payments, vendor payments, transit payments, or recurring payments,” he said.
The Governor said retail digital payments in India had grown rapidly from 162 crore transactions in FY2012-13 to over 14,726 crore transactions in 2023-24 (till February 2024). That is approximately a 90-fold increase over 12 years.
“Today, India accounts for nearly 46% of the world’s digital transactions (as per 2022 data). The extraordinary growth in digital payments is also evident in the Reserve Bank’s Digital Payment Index, which has witnessed a four-fold rise in the last five years,” he said.
Stating that UPI has become the most talked about fast payment system not only in India but across the world, he said it was the biggest contributor to the growth of digital payments in India.
“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 crore in CY-2017 to 11,761 crore in CY-2023. Apart from being a user-friendly interface and facilitating QR code-based payments, the UPI has evolved to include advanced functionalities such as offline payments through near field communication (NFC) technology (UPI Lite X), payments through feature phones (UPI 123Pay) and AI based conversational payments (hello! UPI),” he added.
He said currently UPI was processing close to 42 crore transactions in a day and the number would grow faster.
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