India Prepares For Complete Interoperability In Digital Bill Payments
The new system of interoperability would primarily be for net banking and mobile banking transactions.
India's payments ecosystem is now ramping up for a new interoperable digital bill payments network, according to two people with direct knowledge of the matter.
For this, NPCI Bharat BillPay Ltd. is working closely with banks and fintechs to find the right way of implementing this, both the persons quoted above said on the condition of anonymity.
Since the rollout is expected to come in multiple phases, the first phase dealing with setting the rules for payments and designing the system is set to come up next month, the second person quoted above said.
Accordingly, NPCI Bharat BillPay is in conversations with multiple banks and fintechs, including HDFC Bank Ltd., Axis Bank Ltd., Yes Bank Ltd., State Bank of India, Pine Labs, PayU, BillDesk and others, they said.
The development comes in response to Reserve Bank of India Governor Shaktikanta Das' announcement on March 4 that the regulator expects the launch of interoperable internet banking in this calendar year.
The step is also part of the payments vision 2025 of the RBI, Das said.
Currently, while payments through the unified payments interface and mobile wallets are interoperable, internet banking transactions through payment aggregators are not. In such cases, banks have to integrate separately with each payment aggregator for different merchants.
Moreover, a lack of a set of rules for these transactions causes delays in the actual receipt of payments, the RBI governor said.
According to the first person quoted above, the new system envisages that all banks be connected to NBBL on one side and all payment aggregators on the other side. With NBBL in the middle, handling all banking propositions, it would rule out the need for creating multiple bilateral pipelines.
Further, it would also help in standardising the settlement timelines for merchant payments, the first person said.
The new system of interoperability would primarily be for net banking and mobile banking transactions, both the persons quoted above said. And to begin the work on this, NBBL has asked banks and fintechs to define some standards for these payments, like customer refund timelines, settlement timeline and so on, they said.
With the RBI aiming to have all payment rails under a centralised payment system, interoperable net banking is expected to increase customer adoption.
According to Rohan Lakhaiyar, partner-financial services risk at Grant Thornton Bharat, the step would not just allow standardisation but also be cost-effective.
"When banks integrate with PAs, there is cost involved. But now, with everyone connecting with NBBL, it would become cost-effective and also allow more participants to come on-board," he said.
According to RBI data, about 38.3 crore internet banking transactions worth Rs 9,124 crore were processed by banks in January. The data shows that 8.2 crore customers used this medium for transactions. Through mobile banking, about 1,179 crore transactions were processed in January.
Queries mailed to HDFC Bank, Axis Bank, Yes Bank, SBI, PayU, BillDesk and the RBI were not immediately responded to. The NPCI and Pine Labs declined to comment.
