The Reserve Bank of India has announced the newest measures to scale the use of digital payments in India, involving the cancellation of charges on online fund transfer service – National Electronic Funds Transfer (NEFT), and introduction of an interoperable system to initiate payments for parking fees, fuel, and more through FASTags.
When will the measures be effected?
The declaration of improved steps came precisely three years after the National Democratic Alliance authorities executed demonetization, the national currency gleaning exercise to:
- Counter black-money practices, terror financing, and other illicit acts.
- In an attempt to make transactions more accessible and cheaper, the declared steps by the banking regulator will be imposed from January 2020.
RBI has also put forward setting up of acceptance development fund to increase, towards setting up of payment infrastructure with effect from 1 January 2020. It announced to permit the authorized payment systems and instruments like wallets, cards, and instant payment service UPI to link FASTags, which is an electronic toll connection device fixed in the vehicle to perform online payment without having to stop on tolls.
Digital payments are on the rise
RBI stated, “Enable processing of e-mandates for transactions through UPI. Constitute a committee to assess the need for a plurality of QR codes and merits of their co-existence or convergence from both systemic and consumer viewpoints.”
According to the bank, digital payments composed 96% of total non-cash retail payments between October 2018 and September 2019. Concurrently, NEFT and Unified Payments Interface recorded 252 and 874 crore transactions, respectively. Further, NEFT witnessed a year-over-year growth of 20% while UPI experienced a 263% growth.