RBI approves interoperable payment system to boost digital transactions

The Reserve Bank of India has greenlit the launch of an interoperable payment system for Internet banking by NPCI Bharat BillPay Ltd, aiming to streamline fund settlements for merchants. Governor Shaktikanta Das announced this development on March 4 during the Digital Payments Awareness Week celebrations in Mumbai.

Das emphasized the significance of this approval, highlighting its potential to enhance user confidence in digital payments. The interoperable system is slated for release within the current calendar year.

Internet banking stands as a longstanding avenue for online merchant transactions, covering a wide array of payments such as taxes, insurance premiums, mutual funds, and ecommerce transactions. However, current processes through Payment Aggregators (PAs) lack interoperability, necessitating separate integrations between banks and various PAs for each merchant.

This fragmented landscape poses challenges for both banks and customers, requiring intricate arrangements between merchants' PAs and customers' banks for seamless transactions. Governor Das highlighted the complexity of integrating with multiple PAs, underscoring the need for a more unified approach.

The forthcoming interoperable system promises to address these hurdles, providing a standardized framework for internet banking transactions across different payment aggregators. This move is expected to simplify payment processes, bolstering the digital payment ecosystem and fostering financial inclusion.

Governor Das urged all stakeholders, including industry players, payment system operators, media, and digital payment users, to embrace the mission of 'Har Payment Digital.' With digital payments increasingly becoming the norm, initiatives like the interoperable payment system serve as catalysts for a more accessible and efficient financial landscape in India.

What is interoperability?
In simpler terms, different systems or technologies can communicate and work together effectively. For example, if you have a smartphone from one brand and a smartwatch from another, interoperability means they can still share information and function well together, like syncing notifications or tracking your fitness activities seamlessly