Fintech Companies Member of Centralized Payment System: RTGS and NEFT

 

Key highlights:

  • The Reserve Bank of India (RBI) announced that fintech companies process RTGS NEFT transactions.
  • New interoperability standards and cash withdrawal capabilities for digital payment wallets.
  • The new step by RBI will reduce settlement risk.

RBI new announcement

RTGS NEFT

Paytm, Visa, Mastercard, and PhonePe will soon start the RTGS and NEFT transaction. News norms on interoperability and user can withdraw cash from ATMs. These reforms seek to level the playing field for non-bank payment operators and banks. These will lower down the settlement risks by broadening the payment system.

Significance of RBI’s announcement

Digital transfers were only available to banks for the processing of interbank settlements and company pay-outs. It is now proposed to allow non-bank PSOs such as PPI issuers, card networks, white-label ATM operators, and Trade Receivables Discounting System (TReDS) platforms controlled by the RBI to join Centralised payment systems (CPSs) directly. The decision by RBI to allow non-banks to make CPSs would spur infrastructure development and reduce settlement risks. The rapid growth of digital payments is by the UPI infrastructure. This step will give additional value to product innovation and integration. read more

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