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Interoperable Internet banking system that benefits merchants to go live in 2024: RBI Governor

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At present, internet banking transactions are processed through payment aggregators

Mumbai: Reserve Bank Governor Shaktikanta Das on Monday said an interoperable system for Internet banking will be launched in 2024.

At present, internet banking transactions are processed through payment aggregators (PA), and there is no interoperability, Das said while speaking at the launch of Digital Payments Awareness Week for 2024.

A bank is required to separately integrate with each PA of different online merchants, he added.

An arrangement between a customer’s bank and a specific PA is necessary, failing which payment cannot be made to a merchant, Das said, describing the potential difficulties which the current system entails.

“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.

The central has given approval for implementing an interoperable system to NPCI Bharat BillPay (NBBL), Das said.

“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,” the governor noted.

The new system will be more efficient, convenient and also potentially less costly for the stakeholders, an official explained.

Das said Internet banking is one of the oldest modes for online merchant payment transactions and added that such a facility of interoperability was part of the RBI’s payments vision for 2025.

He called it a “preferred channel” through which payments like income tax, insurance premiums, mutual fund payments, e-commerce, etc are undertaken.

An official said even after the huge success of the 2016-launched UPI, internet banking continues to account for over 10 per cent of overall transactions.

The governor further said the flagship of the country’s payment systems, the UPI, has become the most talked about fast payment system not only in India but across the world.

The share of UPI in digital payments reached close to 80 per cent 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. Currently, UPI is processing close to 42 crore transactions in a day.

Das said the trust in digital payments is built on the pillars of transparency, ease of use and above all security.

Hence, reinforcing the notion of safety and security of the system is very important, the governor said.

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