In a bold move to revolutionise its digital payments ecosystem, the Reserve Bank of India (RBI) has set its sights on launching an interoperable payment system for internet banking in 2024. This strategic initiative, spearheaded by RBI Governor Shaktikanta Das, carries the promise of not only streamlining financial transactions but also bolstering the country’s efforts towards financial inclusion.

The current landscape reveals a critical bottleneck in the efficiency of internet banking transactions, particularly those handled by Payment Aggregators (PAs). The lack of interoperability means that each bank must navigate the intricate process of separately integrating with various PAs linked to different online merchants. This cumbersome procedure not only consumes valuable time and resources but also poses a significant challenge for smaller banks that might struggle to integrate with every PA. Mr Das’s announcement sheds light on the approval granted to NPCI Bharat BillPay Limited (NBBL) for implementing this ground-breaking interoperable system. This move is poised to break down silos within the digital payment space, fostering collaboration between banks and PAs to create a more cohesive and efficient framework. One of the primary motivations behind this initiative is to expedite fund settlements for merchants. The current system’s shortcomings result in delays in payment receipts for merchants, coupled with increased settlement risks. With an interoperable system in place, the RBI aims to mitigate these issues, creating a seamless process that benefits both financial institutions and merchants. The significance of this step extends beyond mere transactional convenience. It aligns with India’s broader ambition of achieving financial inclusion on a grand scale. By breaking down the barriers that hinder interoperability, the RBI is taking a giant leap towards making digital financial services accessible to all, regardless of geographical or institutional constraints. This move also addresses a critical gap in the existing framework ~ the absence of a common payment system and a standardised set of rules for internet banking transactions.

The lack of such a framework has contributed to the fragmented nature of digital payments, hindering the growth potential of this sector. The interoperable system envisaged by the RBI promises to bring about a cohesive structure, reducing complexities and creating a more user-friendly experience for both consumers and businesses. As we anticipate the launch of this transformative system later this year, it is crucial to recognise the potential it holds for catalysing India’s economic growth. The enhanced efficiency in digital payments is poised to stimulate economic activities, promote entrepreneurship, and contribute to the nation’s vision of becoming a digital-first economy. By addressing the current challenges head-on, the RBI is not only streamlining financial transactions but also paving the way for a more inclusive and dynamic economy. As the nation eagerly awaits this transformative leap, it is evident that this initiative has the potential to reshape the future of digital finance in India.