New Delhi: The digital payments industry has been booming throughout the pandemic. UPI recently completed 2 billion payments. Seeing the rapid growth of this industry, two banking authorities have initiated setting up a regulatory body. The RBI will play a crucial role in setting up of this initiative.
Under the Reserve Bank of India’s Self Regulatory Organisation framework.
Currently, in talks, the Indian Banks Association and the Payments Council of India could conduct a formal discussion this month. They will formalize a proposal this month.
The IBA is an association that represents more than 200 banks across India. It is responsible for strengthening the role of banking systems in India. The PCI represents the various payment industry players. It resolves several issues that crop up in the industry and represents the interests of several digital payment platforms such as PayTM and Google Pay.
IBA and PCI will be launching this initiative to introduce a system of checks and balances. Another aim is to nullify the conflict of interest between varied parties in the digital payments industry.
Objectives of Regulating the Digital Payment Ecosystem:
The objectives of the regulations are listed to be improving communications between authorities, bringing industry standards, and to resolve disputes.
Reserve Bank of India had introduced a Self Regulatory Framework for digital payments. This self-governed initiative will operate under the guidelines of this framework.
A specific objective of the SRO will include compliance between payment gateways, which handles credit card or digital payments for e-commerce platforms and payment aggregators.
RBI’s Interest in Self-Governance Initiative under SRO:
For the RBI, self-governance of the payments ecosystem has been a constant objective.
The SRO would be requested to smoothen the backend integration of New Umbrella Entities. The SRO will facilitate communications between the National Payments Corporation of India and the New Umbrella Entity.
In a statement made by the RBI, they stated,
“As the payment ecosystem matures and the number of payments systems proliferate, it becomes necessary, in the interest of optimal use of regulatory resources.’
RBI stated that the payments industry would develop standards relevant to pricing practices, customer protection, system, and grievance redressal mechanisms, among others.