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Interoperable payment system

Facts for Prelims (FFP)

 

Source: Deccan Herald

 Context: The Reserve Bank of India (RBI) plans to launch an interoperable payment system for internet banking in 2024.

  • This system, expected to be launched in the current calendar year, aims to expedite fund settlements for merchants and enhance online transactions.
  • The interoperable system will be implemented by NPCI Bharat BillPay Ltd (NBBL), a subsidiary of the National Payments Corporation of India (NPCI), following RBI approval.
  • It will enable customers to make net banking payments to businesses regardless of whether their banks and the merchants’ payment aggregators are integrated.

Currently, online merchant transactions rely on non-interoperable payment aggregators, requiring separate integration with each aggregator, leading to delays and settlement risks.

Interoperability is the basic ability of multiple digital systems, applications and databases to connect and communicate with each other.

Payment platforms leverage financial technology to connect and share data among ecosystem partners like banks, payment gateways, payment processors, merchants and consumers.