The document foresees an annualized growth of 50% for UPI payments and 20% for IMPS and NEFT. The RBI said it will publish a discussion paper on the need for “proportionate regulation” against big tech and fintech players. The document said that various use cases would be explored to achieve greater efficiency in the processing and settlement of domestic and cross-border payments using CBDC.
RBI Payments Vision Increase Digital Transaction
The Reserve Bank of India RBI on Friday June 17 launched its ‘Payments Vision 2025’ which aims to strengthen the electronic payments ecosystem in the country.
Based on the central theme of ‘Electronic Payments for Everyone, Everywhere, Anytime 4 Es, the document envisions providing users with safe, secure, fast, convenient, accessible and affordable electronic payment options.
The vision document was prepared after consultation with key stakeholders and has five key themes Integrity, Inclusion, Innovation, Institutionalization and Internationalization 5I. The document covers 47 specific initiatives and 10 expected results that it intends to achieve in the coming years.
The central bank aims to increase the number of digital payment transactions by more than 3X by 2025 and reduce the volume of check-based payments to less than 0.25% of total retail payments. The document also foresees an annualized growth of 50% for UPI payments and 20% for Immediate Payment Service IMPS and National Electronic Funds Transfer NEFT.
In a new push for digital payments, the RBI will work to reduce cash in circulation as a percentage of gross domestic product GDP. It will also aim to increase the number of registered users for mobile-based transactions at a compound annual growth rate CAGR of 50% by 2025.
The document also outlines the central bank’s goal of increasing point-of-sale PoS debit card transactions by 20% and increasing card acceptance infrastructure across the country to 250 Lakh touch points. All of these initiatives are part of the document along with the RBI initiative to ensure debit card usage exceeds credit card usage in terms of value by 2025.
Big push for electronic payment
The RBI will undertake 47 initiatives to optimize the electronic payments infrastructure in the country as it prepares for the next evolution of the space. These include the integration of alternative authentication mechanisms, in addition to OTP, such as biometric and digital tokens to authenticate users.
The central bank will also take initiatives to promote the use of Legal Entity Identifiers LEIs to promote cross-border payments and assess sanctioned entities. LEI is an alphanumeric code used to uniquely identify the parties involved in a financial transaction and faster tracking of payments.
As part of the initiative, the RBI aims to improve the scalability of payment systems. In the document, RBI said it plans to review and increase the lots on which NEFTs are traded.
As part of the vision, the central bank will explore options to require domestic processing of payment transactions. The decision was made in view of emerging geopolitical risks. The RBI also said it will carry out a study on the feasibility of the digital payment protection fund (DPPF) which will provide a security cover for defrauded customers and issuers of payment instruments.
The RBI will also enable a framework for geo-tagging of payment system touch points across the country. As part of this, the collection of data related to the coordinates of the payment infrastructure throughout the country has already begun. The measure has been designed to measure the extent of the penetration of digital payments throughout the country.
RBI also appears to have set its sights on the big tech players and their “increasingly dominant role”. In the vision document, RBI said it will publish a discussion paper on the need for “proportionate regulation” against big tech and fintech players. This document will cover topics such as national incorporation, use of data, among others.
The authorities will also carry out an evaluation of the charges for all payment systems. “A thorough review of all aspects related to the charges involved in various digital payment channels will be carried out,” the document said.