Banks No Longer Needed For NEFT, IMPS, RTGS; Google Pay, PhonePe & Other Fintech Firms Can Do Them Now
Under a number of measures for digital payments that were announced by the RBI, fintech companies have now been allowed to process RTGS and NEFT transactions.
How will this affect our transactions? Read on to find out!
RBI Allows Digital Payments Platforms To Process RTGS, NEFT Transactions
The Reserve Bank of India announced multiple new measures for digital payments which includes enabling fintech companies to process RTGS and NEFT transactions. There also are new norms introduced on interoperability and cash withdrawal facilities for payment wallets.
Through these measures, the RBI plans to level out the playing field for non-bank payment operators and banks. Another motive behind this Is to reduce settlement risks by broadening the ecosystem.
In simple terms, companies like Paytm, Visa, Mastercard, and PhonePe will also be able to process your RTGS and NEFT payments.
Shaktikanta Das, the central bank governor announced the new reforms while speaking at Monetary Policy Committee (MPC). He also spoke about a specific group of fintech companies being allowed to become members of centralized payment systems, such as RTGS and NEFT. these include prepaid instrument issuers (PPIs), card networks, and TReDS operators, among others.
As per Das, “It is now proposed to enable non-bank PSOs like PPI issuers, card networks, white label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by RBI, to take direct membership in CPSs.”
As we all know, RTGS and NEFT processes were only conducted by the banks until now.
Will This Move Reduce Settlement Risks?
Multiple experts have confirmed that this move to CPSs membership for digital payments platforms will be beneficial for the growth of infrastructure and also to reduce the risks in settlements.
“Given the exponential growth in digital payments, dominated by the UPI infrastructure, this move will allow better product innovation and integration. It will also reduce systemic risk for digital payments,” said Shilpa Mankar Ahluwalia, partner and head of fintech, Shardul Amarchand Mangaldas
As we all know, RTGS or Real Time Gross Settlement System is used for transactions between businesses that are above the amount of Rs. 2 lakhs, whereas, NEFT or National Electronic Funds Transfer enables people to transfer their money directly to other banks across the nation.
A detailed circular will be issued by the apex bank on these developments soon. We’ll keep you informed as we get any more updates.