India’s digital payments landscape has undergone a transformation over the past decade following the launch of Unified Payments Interface (UPI). To build on this momentum and expand the global footprint of India’s payments ecosystem, the RBI has released ‘Payments Vision 2028’, which builds on the foundation of its earlier such documents.

The central bank will focus on promoting inclusivity and resilience and deepening the trust in India’s digital payments ecosystem over the next three years.

The RBI has proposed several new initiatives, including increasing focus on cross-border payment solutions, exploring electronic cheques, strengthening digital payments security framework, among others. 

The vision document, based on the theme ‘Shaping India’s Payment Frontier’, talks about strengthening the existing systems and infrastructure. As part of this, a framework for interoperability in the Trade Receivables Discounting System (TReDS) has been proposed. 

Similarly, the central bank will review the cross-border payments framework to enhance efficiency and introduce cyber key risk indicators (KRI) framework to enhance security in the digital payments landscape. 

Let’s take a detailed look at the RBI’s key proposals. 

What’s In It For Cross-Border Payments?

The central bank has been looking to strengthen the cross-border payments landscape for a while now. As a part of 2028 vision, it will streamline the regulatory process for cross-border payment authorisation, along with recognising small payment system providers with a flexible regulatory approach.

This will promote ease of doing business for such smaller players. Additionally, the RBI is also looking to provide flexibility to customers to switch among payment service providers seamlessly through Payments Switching Service (PaSS). 

Going forward, it will also publish reports on cross-border payments data, highlighting metrics such as volumes, transaction costs, transparency, speed of transactions and more. 

“Efficient cross-border payment systems support Indian exporters and importers, especially from the MSME sector, to access global markets enhancing their competitiveness. Similarly, efficient payment arrangements are critical for reducing the cost of remittance. The RBI shall undertake a comprehensive review of the existing cross-border payments ecosystem to identify frictions from regulatory, operational, and technological perspective,” the document said. 

Notably, last year, the RBI issued cross-border payment aggregator licences to several players, including Airpay, Razorpay, PayU, Paytm, among others. Initiatives like Project Nexus have also been conceptualised by the RBI’s innovation hub to connect the fast payment systems of five ASEAN countries namely Malaysia, Philippines, Singapore, Thailand and India. 

Taking Cheques Digital 

Like the past vision documents which highlighted tangible innovations, the ‘Payments Vision 2028’ calls for exploring ‘electronic cheques’. 

To bring the benefits of paper bills of exchange and speed of digital payments, the central bank will explore electronic cheques in India. 

“To leverage the unique benefits of paper-based instruments and the speed and reliability of electronic payments, and cater to new business use cases, introduction of electronic cheques in India shall be explored.” the document added.

Notably, countries like the US and Canada already use e-cheques. Additionally, the central bank will also explore innovation in the card payment space. 

How RBI Plans To Strengthen Digital Payment Security

Security of digital payments has been a big concern for the central bank amid the rising cases of digital frauds. To curb this, the RBI said it will work on the cyber key risk indicators (KRI) framework for non-bank payment system operators (PSOs). 

Non-bank PSOs are companies that run or manage payment systems without being a bank, like PhonePe, Google Pay, Paytm, MobiKwik, among others.

The central bank said that the KRI framework will allow it to assess and monitor durability in cyber security of such entities on a continuous basis. It will help generate early warning signals for identifying and monitoring potential IT and cyber risks

Additionally, the central bank will work on a shared responsibility model where both the customer’s bank and the recipient’s bank share liability in case of fraud. Right now, the responsibility largely sits with the customer’s bank (issuer).

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