1st Time Ever, Non-Banks Will Offer NEFT, RTGS Services To Customers: Big Change In RBI Rule
As per newest reports coming in, payment system providers, prepaid card issuers, card networks and white label ATM operators will now be given access to CPS, i.e., the Centralized Payment Systems.
What does this indicate for non-banks? Read on to find out all the details!
RBI Enables Non-Banks Will Offer NEFT, RTGS Services To Customers
The Reserve Bank of India has announced that payment system providers along with prepaid card issuers, card networks and white label ATM operators will be enabled to access Centralised Payment Systems (CPS), such as real time gross settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems.
The plan is to bring non-banks on the same platform, and this seems to be just the first phase.
It was in April when the RBI had said that participation of non-banks in the CPS, such as RTGS and NEFT systems would be encouraged in a phased manner. As per reports, the direct access for non-banks to CPS will reduce the overall risk in the payments ecosystem.
It will also result in multiple advantages for non-banks, such as the reduction in the cost of payments, reduction in the dependence on banks, reduction in the time required for completion of payments, eliminating the uncertainty in finality of the payments as the settlement is carried out in central bank money
As per the circular by RBI, “On a review of extant arrangements and after detailed discussions with Payment System Providers (PSPs), it is advised that, in the first phase, authorised non-bank PSPs, viz. PPI Issuers, Card Networks and White Label ATM Operators shall be eligible to participate in CPS as direct members.”
How Will This Move Help?
This move will also help reduce the risk of failure or delay in the execution of fund transfers, especially when the transactions are directly initiated and processed by the non-bank entities.
In April, 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.