RBI’s Department of settlement system released the Payment Vision 2025 document which covers the achievement of the goals set out in 2019-21 payment vision for 2025. The Vision document highlights the 5 Is’ (Integrity, inclusions, innovations, institutionalisation, and internationalisation) along with 4 Es (e-payment for everyone, everywhere, and every time). The RBI’s vision follows the theme of 6 attributes that are- safe, secure, fast, accessible, convenient and affordable payment system. It is encouraging to see the RBI taking measures for improved safety and security for rural residents, where digital and financial literacy remain major concerns.

Cross border payment is the process of taking in or paying funds from different countries. It defines that the location where the merchant is registered is different from the country that has issued customers’ card. By Introducing the additional factor of authentication for international transaction using card issues in India, RBI will evaluate the process for additional safety. The vision also includes RBI’s working towards the introduction of Central Bank Digital Currency (CBDC) and bring efficacies in Payment processing. The RBI shall also evaluate the possibility of central bank of other countries opening their INR accounts.

The RBI is exploring the possibility of processing payment transaction within India that can be processed outside the country. Yet another point that RBI is focusing on is operationalising a national card switch for card transaction at POS and resultant settlement. Moving forward RBI shall take necessary measures to migrate the existing RBI operated payment system that does not adhere to the ISO 20022 standard. Evidently, the transit payment ground has evolved rapidly from the closed loop to a full-fledged open loop smart card-based ecosystem that allows the use of smart cards outside the transit.

RBI shall constitute a PAC comprising experts, and industry stakeholders to assist the Board for Regulation and for Supervision of Payment and Settlement Systems (BPSS). Further, the entity plans to fabricate and review frameworks for all sort of PPIs. BPNL services would be examined and mandated to follow guidelines. There are many useful schemes in line that will foster the growth of the Indian Payment ecosystem such as Payments Infrastructure Development Fund (PIDF) scheme.

Payment Intermediaries including offline aggregators will be mandated to comply with licensing and capital requirement along with abiding by the regulatory mandates implemented by RBI. The Fintech players will need to comply the regulatory mandates proffered by RBI. The Government entity will also introduce frameworks that would throw light on elements such as data and domestic incorporation, that would attempt regulations for Big Techs and FinTech organizations

With the evolution of digital transaction, the risk of fraud has also increased. To overcome these situations the Reserve Bank of India might come up with an alternative risk-based authentication and mandates that banks can use it as an alternative mechanism. Introduction of alternative mechanism will provide a scope for industry players to offer innovative solutions for digital transaction with enhanced security as well as seamless experience to the users. There are 2 regulated entities that were implemented to set up a robust governance structure, implementing standard of security control, and mechanism to customers for immediate notification of malicious activities to the issuer. Till the time Central Payment Fraud Information Registry takes time to set up the features, RBI will examine and leverage the ODR (Online Dispute Resolution) system in the initial phase.

Tokenisation can be defined as a replacement of actual card details with an alternate code called TOKEN, which is unique for every combination of card. It is an encryption which is considered safer as the actual card details remain hidden from the merchant while a buyer is executing the payment procedure. The card holder can get the card tokenised by initiating a request on the app provided by token requester. Tokenisation requestor will forward the request to the card network which will issue a token corresponding to the combination of card with the consent of card issuer.

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