“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 during a digital payments awareness event organised by the RBI.
Internet banking, one of the oldest channels for online merchant payment transactions, is a favoured channel for payments like income tax, insurance premiums, mutual fund payments and e-commerce, but the current system faces certain challenges, Das said.
At present, transactions processed through payment aggregators (PA) required banks to separately integrate with each PA of various online merchants. If customers desire to make payments from their bank accounts to a particular merchant, the latter’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 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,” Das said.
He pointed out the rapid growth in retail digital payments in India, with transactions growing from 162 crore in FY13 to more than 14,726 crores in the current financial year till February. Today, India accounts for a massive 46% of the world’s digital transactions, Das said citing 2022 data.Highlighting the huge growth in India’s flagship payment system – the Unified Payments Interface – Das said that the share of UPI in digital payments had reached close to 80% in 2023. Meanwhile, the volume of UPI transactions increased from Rs 43 crore in 2017 to Rs 11,761 crore in 2023, he said.Das listed out various ways in which the UPI had evolved to include new functions, such as offline payments through near field communication technology, payments through feature phones, and AI based conversational payments amongst others.
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