RBI Wanted More Digital Payment Transactions, Affordable But More Secured Loans

The Reserve Bank of India’s Payment and Settlement Systems in India: Vision 2019-21, released, makes a pitch for an increase in digital payment transactions, with a focus on low margins and higher volumes, which will enable lower-cost transactions and an eventual reduction in use of cash in the economy. The RBI periodically issues a three-year vision statement for the payments and settlements sector in India, with the last iteration covering the 2016-18 period.

The latest vision document studies the developments and achievements in the last three years, including the rise in digital payments, unified payments interface, and Aadhaar-based payment infrastructure, with a mention that use of the biometric identification is under judicial review.

The document focuses on four key goal posts: competition, cost-effectiveness, convenience, and confidence or security in such payments and settlements. The document pitches for a self regulatory organisation for the sector, and a cross regulatory mechanism that will enable better supervision of payment transactions.

Among the key concepts pitched in the document are an acceptance development fund, which will help cut transaction costs in smaller cities, geo-tagging of all point-of-sales infrastructure, a round-the-clock helpline for dispute resolution, internal ombudsman for payment players, and expanding the domain of trade receivable platforms.

In what could be a dampener for payment players, the RBI document pitches for lower cost on transactions, and delinking the cost from the value of transaction that is prevalent now.

“The savings achieved at all levels on account of digitisation of payments need to be considered in pricing of these services to the end customers. Payment system operators (PSOs) need to consider cost of accessing and managing transactions and accordingly price their services. The aim is towards progressive reduction in ‘per-transaction’ cost to customers keeping in view the marginal cost advantage with increase in the number of transactions,” the document said.