Interoperability in net banking payments soon

The National Payments Corporation of India (NPCI) is in the process of integration with a group of five or six banks to go live with interoperability in netbanking and mobile banking payments, three people in the know said.

While the date for the launch of the first phase of the project has not been decided with the banks, it should happen within the next few months, they said. Other banks will be integrated in later phases.

“ICICI Bank and HDFC Bank are in advanced stages of integration… There are three or four more banks with whom work is going on,” one of the persons told ET. “While the final date of the feature going live is yet to be decided, it will happen very soon with the first batch of lenders.”

Once netbanking becomes interoperable, consumers can choose to make online payments via netbanking while checking out of ecommerce portals.

“Currently banks need to tie up with payment aggregators who in turn onboard merchants for netbanking payments… Once interoperability is brought in, that problem will be solved and every bank will be accepted across merchant outlets,” a second person cited above said.

This would help reduce the pressure on Unified Payments Interface (UPI)-based transactions, the person said.

Over the last few years, UPI has grown exponentially, often at the cost of debit card payments and netbanking payments.

Emailed queries to NPCI, HDFC Bank and ICICI Bank remained unanswered until press time Wednesday.

The initiative is being driven by NPCI Bharat BillPay, the bill payments subsidiary of the Mumbai-based retail payments entity.

With interoperability, payment aggregators and banks can directly integrate with a common platform and get merchants on to the other side of the same platform.

At present, to enable payments through netbanking, merchants and aggregators work with payment gateways such as Mumbai-based BillDesk to get access to netbanking systems of large banks.

Unlike card payments or UPI payments, netbanking is typically used for very large-ticket size transactions. According to central bank data, in October alone, there were almost 420 million payment transactions undertaken by consumers. The total amount settled via these transactions stood at over Rs 100 lakh crore. The average ticket size of these transactions would be above Rs 2.5 lakh.

Industry insiders said consumers prefer to pay via their bank application or through their bank website while undertaking insurance premium payments or tax payments and such. The higher transaction success rates on these payment modes have resulted in this becoming more reliable for very large-ticket-sized transactions.

The idea is to get more consumers to choose these alternate payment methods to reduce the stress on UPI backend, people cited above said.

“Once the top tier banks go live with this product, consumers could start using this service, then eventually smaller banks will join the ecosystem as well,” said the person quoted first.

Netbanking interoperability was first proposed by the Reserve Bank of India (RBI) in its vision document for 2025. Eventually, in March 2024, RBI governor Shaktikanta Das spoke about permitting NPCI Bharat BillPay to start work on netbanking interoperability.