The Reserve Bank of India (RBI) on Friday announced fresh steps to push digital payments in India, including removing charges on online fund transfer system National Electronic Funds Transfer (NEFT), introducing interoperable system such that FASTags can be used to pay parking fees, fuel, among other measures.
The banking regulator mandated banks not to charge savings bank account customers for online transactions via NEFT from January 2020, in a attempt to make transactions cheaper.
More measures to push digital payments comes exactly three years after the National Democratic Alliance (NDA) government announced the massive currency culling exercise, demonetizing 86% of the currency in circulation on 8 November, 2016 in its fight against black money, terror financing and counterfeit currency.
Even though cash transactions continue to dominate, demonetization, coupled with steps taken by the government and the banking regulator has nurtured the habit of people spending through various digital platforms.
The banking regulator also proposed setting up of acceptance development fund to increase, towards setting up of payment infrastructure with effect from 1 January, 2020.
It also proposed to permit all authorised payment systems and instruments as wallets, cards and instant payments system UPI to link FASTags-- an electronic toll connection device fixed on the windshield of a vehicle to enable drivers to zip through toll plazas without having to stop. The move will facilitate the use of FASTags to pay for parking and fuel, making the system interoperable.
“Enable processing of e-mandates for transactions through UPI. Constitute a committee to assess the need for plurality of QR (quick response) codes and merits of their co-existence or convergence from both systemic and consumer viewpoints," RBI said. While the details are awaited experts said this may enable common QR code through integration of various payment options.
“RBI has offered incentives which would increase both the breadth by getting new players in tolls and transit space as well depth of the ecosystem by enabling new use cases like e-mandates. The initiatives are in the regulatory continuum to drive interoperability and adoption" Vivek Belgavi, Partner at PwC India said.
According to RBI, digital payments constituted a 96% of total non-cash retail payments between October 2018 and September 2019. During the same period, the NEFT and instant payments system Unified Payments Interface (UPI) clocked 252 crore and 874 crore transactions, with year-on-year growth of 20% and 263%, respectively.