RBI Approves Interoperable Net Banking Payments for Merchants
The Reserve Bank of India (RBI) has given the nod for implementing an interoperable payment system for internet banking transactions. This move is expected to streamline the digital payments ecosystem in India, making it easier for customers to pay businesses through net banking, regardless of whether their banks and the merchants’ payment aggregators are integrated.
NPCI Bharat BillPay to Launch the SystemThe approval for implementing the interoperable system has been granted to NPCI Bharat BillPay Ltd. RBI Governor Shaktikanta Das announced that the launch of this interoperable payment system for internet banking is expected to take place during the current calendar year.
Benefits for Merchants and Customers
The interoperable net banking payment system will facilitate quicker settlement of funds for merchants. Currently, net banking transactions are not interoperable, requiring banks to individually integrate and have bilateral arrangements with each payment aggregator servicing different online merchants. This new system will eliminate the need for individual tie-ups, making the process more efficient.
Customers will also benefit from this move, as they will be able to pay merchants or businesses online through net banking, even if their bank is not integrated with the merchant’s payment aggregator. This will provide customers with more payment options and convenience when making online transactions.
Current Challenges in Net Banking Payments
Governor Das highlighted the difficulties faced by customers and merchants under the existing system. If a customer’s bank is not integrated with the merchant’s payment aggregator, the bank’s name would not appear under the net banking payment option when the customer is redirected to the payment page. This limitation makes it challenging for each bank to integrate with every payment aggregator, given the multiple number of aggregators in the market.
Furthermore, the lack of a payment system and a set of rules for these transactions leads to delays in the actual receipt of payments by merchants and settlement risks.
Payment Aggregators and Their Role
Payment aggregators are intermediaries that facilitate digital payments between consumers and merchants or businesses. Currently, there are 18 online payment aggregators authorized by RBI, including prominent players such as Razorpay Software Pvt. Ltd, Amazon Pay (India) Pvt. Ltd, Google India Digital Services Pvt. Ltd, Tata Payments Ltd, and Zomato Payments Pvt. Ltd.
Internet Banking: A Preferred Channel for Online Payments
Internet banking is one of the oldest modes for online merchant payment transactions and is a preferred channel for payments such as income tax, insurance premiums, mutual fund payments, and e-commerce transactions. Recognizing the importance of internet banking and the bottlenecks in the current system, RBI had envisaged an interoperable payment system for internet banking transactions in its Payments Vision 2025.
Leveling the Playing Field for Smaller Payment Aggregators
Experts believe that the interoperable net banking payment system will be more beneficial to smaller payment aggregators that have not yet tied up with all banks. This move will level the playing field for these smaller players, as the larger aggregators have already made arrangements with most of the leading banks in the country.
Month: Current Affairs - March, 2024
Category: Economy & Banking Current Affairs - 2024
Deekshitha s
March 7, 2024 at 7:16 amIt’s helpfull for the students