In a bid to enhance banking interoperability, NPCI Bharat Billpay (NBBL) is currently engaged in discussions with banks and fintech firms. This initiative follows the recent approval from the Reserve Bank of India (RBI) for an interoperable payment system for internet banking transactions by NBBL, a subsidiary of the National Payments Corporation of India (NPCI).
Senior banking officials familiar with the matter revealed that talks are underway to implement this system, with plans for NBBL to commence work on the necessary infrastructure by April. ‘Conversations are ongoing with major players in the net banking ecosystem to devise the appropriate implementation strategy,’ stated one of the bankers. ‘Leading banks such as HDFC Bank, SBI, and ICICI Bank are key players in this domain.’
The RBI’s vision, outlined in its 2025 document, aims to centralize all payment rails under a unified payment system. Internet banking, currently outside this umbrella, is being fast-tracked to be brought under this centralized system. This move will align it with processes such as the Immediate Payment Service (run by NPCI), Real-Time Gross Settlement, and National Electronic Fund Transfer systems (run by the RBI).
Centralization of internet banking will facilitate standardization of settlement cycles for merchants, enhance data visibility, and establish effective customer grievance mechanisms, according to sources.
Internet banking transactions are predominantly utilized for significant payments such as income tax, insurance premiums, mutual funds, and vendor payments. Presently, each bank collaborates with specific payment aggregators to enable net banking transactions for customers. Interoperability aims to enable any aggregator to facilitate net banking payments for customers of any bank for online transactions.
RBI data from December 2023 indicates that approximately 380 million net banking transactions were processed by banks, amounting to Rs 93.8 lakh crore. This translates to an average ticket size of Rs 2.5 lakh. In contrast, the average UPI transaction stands at Rs 1,500.
Unlike the Unified Payments Interface (UPI) and IMPS, net banking has seen limited innovation in recent years. The RBI intends to simplify net banking payments for customers to increase adoption rates and diversify transaction volumes across various payment channels.
Kunal Pande, National Co-Head of Digital Risk Security Governance at KPMG, highlighted, ‘At a technical level, new payment aggregators now have the ease to integrate with banks. This will likely lead to increased innovation on the merchant side, as the hurdles on the bank side diminish.’
Currently, large payment aggregators such as Billdesk, PayU, and Razorpay dominate the segment due to their deep integration with banks. Interoperability is expected to expand the market, introducing competition from newly licensed payment aggregators and fostering greater integration on the merchant side.
