 "Interoperability of internet banking system in 2024: RBI's Shaktikanta Das")
The Reserve Bank of India (RBI) is working to allow interoperability for internet banking transactions which is expected to be operational in 2024 and will facilitate quicker settlement of funds for merchants, Governor Shaktikanta Das said on Monday.
The move is aimed at addressing delays in the actual receipt of payments by merchants and is a part of the regulator’s payment vision 2025. The RBI has approved implementing such a system for NPCI Bharat BillPay Ltd (NBBL).
“We had envisaged an interoperable payment system for internet banking transactions… 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 here while addressing the RBI’s Digital Payments Awareness Week celebrations.
Noting that Internet banking is one of the oldest modes for online merchant payment transactions, he said that such transactions at present processed through payment aggregators (PAs) are not interoperable, meaning, 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 the 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 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 said while explaining the need for interoperability.
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Emphasising the need for secured digital transactions, Das said all operators and participants of authorised payment systems are required to do a time-bound resolution of failed transactions.
“Failure to do so may lead to payment of compensation to the users,” he cautioned the payment players.
He said the RBI implemented a web-based payment-related fraud reporting solution - Central Payments Fraud Information Registry.
Das shared data to showcase the sharp rise in digital transactions over the years. He said retail digital payments in India grew from 162 crore transactions in FY2012-13 to over 14,726 crore transactions in 2023-24 (till February 2024) which is approximately a 90-fold increase over 12 years.
“Today, India accounts for nearly 46 per cent of the world’s digital transactions. The extraordinary growth in digital payments is also evident in the Reserve Bank's Digital Payment Index, which has witnessed a fourfold rise in the last five years,” he said.
The Unified Payments Interface (UPI) is the biggest contributor to the growth of digital payments in India, Das said, adding that the share of UPI in digital payments reached close to 80 per cent in 2023. The volume of UPI transactions increased from 43 crore in 2017 to 11,761 crore in 2023.
“It is also worth noting that progressively it has taken less time to reach the tipping point of the next 1,000 crore transactions in UPI. While reaching the first 1000 crore UPI P2M transactions, it took 1,668 days, the latest 1,000 crore transactions took just 45 days,” he said.
While reaching the first 1,000 crore transactions, UPI P2P transactions took 1,329 days, the latest 1,000 crore transactions took 65 days or just over two months, Das said.
“The recent progress of the UPI has been enormous. Currently, UPI is processing close to 42 crore transactions in a day,” he said.
Even after such huge acceptance, there is considerable scope for expanding the use of digital payments in India, he said.