Mumbai: The Reserve Bank of India on Friday outlined its roadmap for the payments sector over the next three years, till December 2028. It highlighted cross-border payments, increased interoperability between payments infrastructure and the introduction of a domestic legal entity identifier (DLEI) for non-individual entities.
The roadmap underscores the dual imperative of “consolidating and strengthening the existing systems/infrastructure, while pioneering the future of payments,” the central bank said in the ‘Payments Vision 2028’ report.
The report proposes initiatives to improve operational excellence, promote strategic innovation and ensure that the payment infrastructure remains resilient, inclusive, user-friendly, and technologically advanced.
Some of these initiatives include a framework for interoperability between trade receivables e-discounting system (TReDS) platforms, explore channels to enable or disable digital payment modes via issuer channels to enhance safety, and the introduction of a shared responsibility framework, wherein both the customer or issuer bank and the beneficiary’s bank will jointly bear the liability of a transaction.
“Switch on and switch off facility for domestic and international card transactions is available to customers, which has helped customers exercise greater control over their cards. Introduction of a similar facility for all digital payment modes shall be explored,” RBI said in the vision document.
The central bank plans to undertake a review of the design and security features of cheques and explore the introduction of electronic cheques, roll out a cyber key risk indicators (KRI) framework for non-bank payment system operators to enhance cyber resilience, and encourage innovation in card payments.
Cross-border payments
A key part of the regulator’s vision includes reviewing and strengthening the cross-border payments ecosystem to enhance efficiency, including by way of publishing dedicated reports on specific aspects.
“While liberalization of the regulations governing cross-border transactions has facilitated efficiency, there is scope for further streamlining and liberalization of the regulations,” the report said. “In view of this, RBI shall envision a cross-border payments framework that is efficient, transparent, resilient, and accessible to a broader range of participants.”
RBI will also examine the case for recognizing small payment system providers under a perpetual regulatory sandbox structure, in addition to streamlining the regulatory process for cross-border payment authorization under the PSS Act, 2007 and FEMA, 1999 to promote convenience and ease of doing business.
“Providing flexibility to customers to switch among payment service providers seamlessly through implementation of a Payments Switching Service (PaSS) shall be examined,” RBI said, adding that it will focus on dedicated research and training capacity to enhance access to domestic and cross-border payments data.
These reports will include domestic trends, global developments, and strategic implications for India’s payment ecosystem to present a comprehensive analysis of cross-border payments in India, covering key metrics such as volumes, transaction costs, transparency, speed of transactions, performance of various channels and corridors, and benchmarking India’s progress against global trends.
The reports shall also identify areas for improvement and evaluate the implications of international developments on the domestic payment system, the release said. Linkages with various central banks, international standard setting bodies, other countries, especially from the Global South, as well as with domestic payments ecosystem shall also be explored to facilitate knowledge sharing, it added.
Domestic identifier
In addition, RBI will look to bring in entities “deemed to be playing a critical role in facilitating digital payments” within the regulatory fold to promote systemic stability and integrity. It will also explore the introduction of a uniform domestic legal entity identifier (DLEI).
“A unique identifier for non-individuals that would enable identification of parties to a transaction is crucial for managing risks in the financial system. In this regard, the feasibility of implementing a uniform Domestic Legal Entity Identifier (DLEI) shall be studied. Currently, there exist myriad identifiers in India, each with its own specific purpose and features. The DLEI, if found feasible, could be new or selected from the existing identifiers,” RBI said.
The central bank noted that e-commerce marketplaces and centralized platforms have been assuming significant responsibilities that could have implications on orderly functioning of the payments ecosystem. “These aspects shall be examined in detail and, if required, the scope of direct regulations shall be extended to cover such entities.”
The regulator will also consider the case for introducing white label solutions in Aadhaar Enabled Payment System (AePS) and bringing such assisted payment providers within the regulatory fold.
