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Payments Vision 2025 released by RBI’s DPSS aiming 3x Increase in Digital Payments

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RBI Payments Vision 2025 aims 3-fold increase in digital payments

On June 17, 2022, the Department of Payment and Settlement Systems (DPSS) of Reserve Bank of India (RBI) released a document on ‘Payments Vision 2025’ on the core theme of ‘E-Payments for Everyone, Everywhere, Everytime (4Es)’ to provide every user with 6 attributes of safe, secure, fast, convenient, accessible, and affordable e-payment options.

  • It is a progressive document aiming to establish India as a powerhouse of payments globally.
  • It also utilizes India’s efforts and builds on the focus of the G-20 (Group of Twenty) to enhance cross-border payments by addressing the four key challenges of cost, speed, access, and transparency.

Basis of Payments Vision 2025:

i.This document has been prepared after considering the inputs from various stakeholders and guidance from the Board for Regulation and Supervision of Payment and Settlement Systems of the RBI.

ii.It is premised on the initiatives of Payments Vision 2019-21, and 5 anchor goalposts of Integrity, Inclusion, Innovation, Institutionalisation and Internationalisation.

There are 47 initiatives proposed under the above five goalposts with following 10 expected outcomes during the Vision period:

i.Volume of cheque-based payments to be less than 0.25% of the total retail payments

ii.More than 3x increase in number of digital payment transactions

iii.UPI (Unified Payments Interface) to register average annualized growth of 50% and IMPS (Immediate Payment Service)/NEFT (National Electronic Funds Transfer) at 20%

iv.Increase of payment transaction turnover vis-à-vis GDP to 8

v.Increase in debit card transactions at PoS (Point of Sale) by 20%

vi.Debit card usage to surpass credit cards in terms of value

vii.Increase in PPI (Prepaid Payment Instrument) transactions by 150%

viii.Card acceptance infrastructure to increase to 250 lakh

ix.Increase of registered customer base for mobile based transactions by 50% CAGR (Compound Annual Growth Rate)

x.Reduction in Cash in Circulation (CIC) as a percentage of GDP.

Refer Page 9 of Official Document on Payments Vision 2025 for list of Specific Initiatives under 5 goalposts

Key Highlights from Documents/Forward-Looking Initiatives:

i.Global outreach of UPI, RTGS (Real Time Gross Settlement), NEFT, and RuPay cards  with nations especially covering the USD (United States Dollar), GBP (British Pound Sterling) and Euro.

  • This will benefit Indian residents with online realization at lesser costs.

ii.NEFT to be made available round the clock throughout the year which is presently operated in batches at half-hourly intervals throughout the day.

iii.To introduce payee name look-up, a service for checking the beneficiary’s actual name for other funds transfer systems such as NEFT, RTGS and IMPS.

  • Currently, only UPI has a facility for the payer to check and confirm the name of the account holder being paid before making the payment.

iv.To provide a security cover to defrauded customers/issuers of payment instruments, a study on scope/feasibility of creation of Digital Payments Protection Fund (DPPF) will be undertaken.

v.Banks and non-bank PSOs (Payment System Operators) will be allowed to process payment transactions abroad subject to certain conditions.

  • Presently, guidelines are in place for domestic storage of payments data.

vi.The feasibility Central Bank Digital Currencies (CBDC) will be reviewed for cross-border transactions as well as for internal benefits.

  • CBDC has been gaining much traction with 86% of the central banks globally reviewing its feasibility for cross-border transactions as well as for internal benefits.

vii.As per the RBI, total digital payments have increased by 216% and 10% in terms of volume and value, respectively, for the month of March 2022 when compared to March 2019.

viii.The usage of paper instruments has come down significantly in March 2022 compared to March 2019, with its share in total retail payments declined from 3.83% to 0.88% in terms of volume and from 19.62% to 11.47% in terms of value.

ix.Over 26 crore digital payment transactions are processed daily by the payment systems, of which UPI system processes more than two-thirds.

x.It expects UPI to register average annualised growth of 50 per cent and IMPS/ NEFT at 20 per cent, and increase in debit card transactions at PoS by 20 per cent.

Recent Related News:

i.RBI Governor Shaktikanta Das has dedicated the Varnika ink manufacturing facility at Mysuru in Karnataka. The facility is a unit of Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of the RBI.

ii.RBI reduced the Ways and Means Advances (WMA) for states and Union Territories to Rs 47,010 crore from Rs 51,560 crore amid uncertainties related to COVID-19 w.e.f. April 1, 2022 and are subject to review.

1APBS– Aadhaar Payment Bridge System6FMI– Financial Market Infrastructure
2BPSS– Board for Regulation and Supervision of Payment and Settlement Systems7FSB– Financial Stability Board
3CAGR– Compound Annual Growth Rate8NCMC– National Common Mobility Card
4CPFIR– Central Payments Fraud Information Registry9PIDF– Payments Infrastructure Development Fund
5CPS– Centralised Payment System10SFMS– Structured Financial Messaging System