{"id":14914,"date":"2024-04-01T06:37:25","date_gmt":"2024-04-01T06:37:25","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/04\/01\/how-interoperability-oiled-the-wheels-of-mobile-payments\/"},"modified":"2024-04-01T06:37:25","modified_gmt":"2024-04-01T06:37:25","slug":"how-interoperability-oiled-the-wheels-of-mobile-payments","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/04\/01\/how-interoperability-oiled-the-wheels-of-mobile-payments\/","title":{"rendered":"How interoperability oiled the wheels of mobile payments"},"content":{"rendered":"
\"How<\/div>


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The Reserve Bank of India\u2019s decision on March 4 to make netbanking interoperable, has helped the country achieve one of the initial targets of fintech policymakers. <\/p>\n

Back in 2016, the Ratan Watal Committee on digital payments<\/a> formed by the finance ministry had recommended making the country\u2019s complete payments infrastructure interoperable.<\/p>\n

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With netbanking interoperability<\/a>, all the major payment ecosystems from cards to UPI<\/a> to wallets will become interoperable.<\/p>\n

\u201cInteroperability benefited consumer facing merchant<\/a> payments, then bill payments and now will open up large value business payments too with netbanking,\u201d said Amit Kapoor, founder of fintech startup OneStack. In his previous avatar Kapoor was the chief executive at payments startup Airpay.<\/p>\n

ET looks at the less than a decade journey of the mobile payments revolution in India and how interoperability played a crucial role in transforming the ecosystem.<\/p>\n

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ETtech<\/span><\/figure>\n<\/div>\n

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Expanded merchant payments <\/strong>
One of the major beneficiaries of interoperability was merchant payments. Cost of acquiring consumers and merchants drastically fell due to interoperability.\u201cWithout interoperability, there is a natural entry barrier for new entrants in the digital<\/a> payment ecosystem, and the payment system competitive landscape typically becomes oligopolistic, with few large players dominating the segment,\u201d said Rohan Lakhaiyar, Partner, Grant Thornton Bharat.<\/p>\n

As of February, RBI data shows that India has around 8.7 million POS terminals and more than 300 million QR codes. An estimated 40 to 50 million unique merchants will have payments infrastructure currently. On UPI 7.3 billion merchant payments were reported in February compared to 4.7 billion interpersonal transactions. <\/p>\n

\u201cUPI would not have grown so much had we not built an interoperable, open network, it became easy to use, easy to acquire merchants and easy to expand the network because of interoperability,\u201d said Sunil Kulkarni, chief executive officer, Business Correspondents Federation of India.<\/p>\n

In February 2017, at the launch of interoperable BharatQR, RBI Deputy Governor R Gandhi had said that the high capex and opex cost of merchant acquisition had delayed the process of digitising merchant payments. <\/p>\n

\u201cWe strongly felt that the time has arrived to consider some level of harmonisation in the use of QR-codes. Bharat QR Code has shown that it is possible,\u201d Gandhi had then said. BharatQR codes eventually were merged into UPI QR codes which today are used at almost every merchant outlet.<\/p>\n

Taking care of product innovation<\/strong>
With interoperability, payment networks started focusing on product innovation while fintechs and banks focused on distribution and user interface.<\/p>\n

\u201cTake the case of card payments, with players like Juspay the experience of paying for ecommerce transactions via cards changed, success rates went up,\u201d said Kulkarni.<\/p>\n

PhonePe, Google Pay, Paytm and the likes built interactive applications which helped UPI grow and brought more users into the digital payments fold.<\/p>\n

Kulkarni further added that given the Indian payments system was built on open source, fintechs could take their solutions outside India too. With UPI going global these efforts are getting further pushed.<\/p>\n

Taking the next step<\/strong>
By setting up BBPS (Bharat BillPayment System), the RBI took a boldstep towards digitising the massive bill payments market in the country. It brought billers from far reaches of the country within a common network.<\/p>\n

Something similar will be achieved with netbanking interoperability too.<\/p>\n

\u201cI believe CBDC will find a major use case in B2B payments and with netbanking opening up to innovation, the next step will be allowing large ticket transactions to happen via CBDC,\u201d Kapoor said.<\/p>\n

Interoperability in netbanking will also bring smaller banks into the digital fold. <\/p>\n

Lokhaiyar of Grant Thornton Bharat said that currently netbanking integration is a time consuming and expensive process and consequently the charges on such payments can go upto 1.5%. <\/p>\n

\u201cIt is inevitable that we shall see significant innovation within this payment method in times to come,\u201d he added.<\/p>\n

The payments ecosystem in the country benefited from government push and venture funding. But policy decisions like open source backend and interoperable customer use case helped expand the network effect.<\/p>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The Reserve Bank of India\u2019s decision on March 4 to make netbanking interoperable, has helped the country achieve one of the initial targets of fintech policymakers. Back in 2016, the Ratan Watal Committee on digital payments formed by the finance ministry had recommended making the country\u2019s complete payments infrastructure interoperable. Elevate Your Tech Prowess with […]<\/p>\n","protected":false},"author":2,"featured_media":14915,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/msid-42031747\/et-logo.jpg","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[247,20648,10799,3159,20649,672,1322,20650],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14914"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=14914"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14914\/revisions"}],"predecessor-version":[{"id":14916,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14914\/revisions\/14916"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/14915"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=14914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=14914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=14914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}