The Reserve Bank of India (RBI) has taken a significant step towards enhancing the interoperability of digital payments by approving an interoperable system for net banking transactions. This move is expected to streamline online payments for customers and merchants, facilitating quicker settlement of funds and eliminating the need for individual tie-ups between banks and payment aggregators.
RBI Governor Shaktikanta Das announced the approval for implementing an interoperable payment system to NPCI Bharat BillPay Ltd. This system will allow customers to pay businesses through net banking, regardless of whether their banks and the merchants’ payment aggregators are integrated. Currently, net banking transactions lack interoperability, requiring banks to have bilateral arrangements with each payment aggregator servicing different online merchants.
Payment aggregators play a crucial role in facilitating digital payments between consumers and businesses. With 18 online payment aggregators authorized by RBI, including prominent names like Razorpay, Amazon Pay, and Google Pay, the digital payments landscape in India has seen rapid growth.
Interoperable net banking payments will function similarly to a clearinghouse, enabling the settlement of internet banking transactions between customers and merchants without the need for individual tie-ups. This streamlined process will enhance efficiency and convenience for both parties involved in the transaction.
Under the existing system, if a customer’s bank is not integrated with a particular payment aggregator, the bank’s name would not appear as an option for net banking payments. This limitation creates hurdles for seamless transactions and delays in payment settlement.
Governor Das highlighted the challenges associated with the current system, emphasizing the difficulty for banks to integrate with multiple payment aggregators and the lack of standardized rules for transactions. The delays and settlement risks associated with these transactions underscore the need for an interoperable payment system for internet banking transactions.
Internet banking remains one of the oldest and preferred channels for online merchant payments, handling various transactions such as income tax payments, insurance premiums, mutual fund payments, and e-commerce transactions. The introduction of interoperable net banking payments aligns with RBI’s Payments Vision 2025, aiming to address bottlenecks and enhance the efficiency of digital payments in India.
Experts believe that this move will particularly benefit smaller payment aggregators that may not have established tie-ups with a wide range of banks. By leveling the playing field, smaller aggregators will have greater access to banking networks, promoting competition and innovation in the digital payments ecosystem.
Overall, the approval of interoperable net banking payments represents a significant milestone in India’s digital payments journey, paving the way for greater convenience, efficiency, and inclusivity in online transactions.
