Coming soon: A new system to integrate netbanking, payment aggregators

This new switch being developed by NPCI subsidiary NPCI Bharat BillPay Limited (NBBL) will not leverage any existing payments system tech but will focus on creating a new system altogether

NPCI Bharat BillPay (NBBL) is working on a new system (switch) to make netbanking easier for customers. The project, called Netbanking 2.0, which is being tested by NBBL, is expected to go live within the next three to four months, said sources in the know.

 

This new switch will not leverage any existing payment system, such as IMPS (Immediate Payment Service) technology, but will focus on creating a new system altogether.

 

NBBL is a subsidiary of the National Payments Corporation of India (NPCI), the body that runs the Unified Payments Interface (UPI). It operates the bill payment system Bharat Connect (Bharat Bill Payment System).

 

For this, NBBL has onboarded multiple ecosystem stakeholders such as banks and payment aggregators.

 

Four major banks and about six to eight payment aggregators are part of the current pilots of the payments system. NBBL is expecting to complete end-to-end testing of the new switch by the middle of May.

 

“Netbanking 2.0 will be a new payments system, enabling banks, payment aggregators, and merchants alike. It will facilitate online merchants that accept netbanking as a payment instrument today, with a better customer experience,” Noopur Chaturvedi, managing director and chief executive officer, NBBL, told Business Standard.

 

Chaturvedi explained that project timelines and launch dates are contingent on testing and regulatory approvals, and therefore did not comment on a specific launch timeline.

 

At present, online payment aggregators such as Razorpay, Cashfree Payments, or CCAvenue have to partner each bank separately to ensure the netbanking solution is available to their merchants, which include travel booking websites, e-commerce platforms, and digital fashion portals, for payment acceptance.

 

Now, picture this: imagine trying to pay at a merchant outlet using netbanking, only to find that your bank isn’t supported by the payment aggregator’s network, making the transaction unlikely to succeed.

 

This implies that netbanking transactions processed through payment aggregators are not interoperable, since a bank separately integrates with each of these entities to cater to a host of merchants.

 

There are also challenges such as a lack of standardisation, little visibility over categories, and issues with chargebacks, settlements, and reconciliations, among others, at present.

 

A payments technology innovation in the form of this new switch is expected to standardise many of these processes.

 

“This new technology is being built in such a way that the network has common connectivity with all the banks. Today, we have to enter a bunch of details before getting connected to netbanking. But the new switch will standardise things from an operational perspective,” said Rahul Jain, chief financial officer, NTT Data Payment Services India.

 

He added that standardisation will help financial services stakeholders, such as banks, when it comes to purchases, integrations, and settlements.

 

“There may also be rate standardisation that will happen across the industry, and transparency in terms of the rate of netbanking, what price one is procuring the payment instrument at, and what it is being sold for,” he added.

 

Chaturvedi explained that the creation of a dynamic quick response (QR) code for multi-device flow is also in the works as part of the flows for netbanking.

 

“One of the flows available is a two-device flow. What we have realised is that a lot of netbanking transactions get initiated on bigger workstations and laptops by businesses and individual users. There, we have created a dynamic QR so that the customer will be able to pull out their phone and authorise the payment,” she explained.

 

These QR codes are not the same as those used for India’s real-time payments system, UPI or those for the central bank digital currency.

 

The Reserve Bank of India (RBI) was working to allow interoperability for internet banking transactions and facilitate quicker settlement of funds for merchants, former RBI governor Shaktikanta Das had said last year.

 

The move was aimed at addressing delays in the actual receipt of payments by merchants and is a part of the regulator’s Payment Vision 2025. The RBI had approved implementing such a system for NBBL in March last year.

 

NBBL was also conducting pilots with eight companies for a new business-to-business payments product with firms such as Mswipe Technologies, EnKash, Cashfree, Zoho, PayMate, and others, Business Standard reported in January.

 

The NPCI is tasked with developing cutting-edge payment solutions in the country for businesses and individuals.

 

It handles networks and switches such as UPI, RuPay, the National Financial Switch, and the National Electronic Toll Collection programme.