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Digital Transformation

Extending AFA to cross-border card transactions should be explored


In terms of transaction share, the Unified Payments Interface (UPI) is the dominant system, accounting for 68% of payment system transactions in India in March 2022, with over 5.4 billion transactions. In terms of transaction share, the Unified Payments Interface (UPI) is the dominant system, accounting for 68% of payment system transactions in India in March 2022, with over 5.4 billion transactions. The number of people per PoS terminal remained high, at around 300. According to the RBI’s report on ‘Benchmarking India’s Payment Systems,’ India has over 150 million digital PoS terminals (QR codes) that facilitate the acceptance of digital payments via cards, e-Money, and UPI.

India’s domestic card network – RuPay – dominates the debit card segment as far as card issuance is concerned. However, RuPay is lagging in the credit card segment, with below 3% share of total cards issued. The movement towards digital payments has been accompanied by a shift towards payment of utility bills, facilitated by the Bharat Bill Payment System (BBPS), which on-boarded over 20,000 billers as at the end of March 2022. Over the years, payment system features, viz. availability, repetitive payments, contactless payments, offline payments, tokenisation, etc., have been enriched to enhance customer convenience while maintaining confidence in payment systems by ensuring requisite safety, security and efficiency measures.

Expanding the scope of RTGS, to settle transactions in major trade currencies such as USD, Euro, Pound, etc., could be explored to facilitate processing of foreign currency transactions. With global focus on enhancing cross-border payment arrangements, it is essential that India explores further actions in this arena. These measures could include, building on the UPI-PayNow interface and exploring avenues for interlinking UPI with fast payment systems in other jurisdictions, enhancing / reviewing the prescribed limits for inward remittances using the Money Transfer Service Scheme (MTSS) to improve customer convenience, adopting differential screening requirements for foreign inward remittances in line with the risk-based regime provided in the Financial Action Task Force (FATF) framework, etc. The possibility of extending Additional Factor of Authentication (AFA) requirement to cross-border card transactions undertaken using cards issued in India, may be explored.

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