It underscores the dual imperative of consolidating and strengthening the existing systems / infrastructure, while pioneering the future of payments.

Key Initiatives and Proposals:

• Inclusivity and Resilience: Developing interoperability in TReDS to enhance efficiency and accessibility.
• Safety: Strengthening safety through features like enabling/disabling transactions across digital modes, a shared responsibility framework between issuer and beneficiary banks, review of cheque security, and a Cyber Key Risk Indicators framework for non-bank PSOs
• Cross Border Payments: Framework review and dedicated reporting.
• Ease of Doing Business: Streamlining regulatory processes under the PSS Act, 2007 and FEMA, 1999, alongside exploring recognition of small payment providers under a perpetual sandbox and introducing a Payments Switching Service (PaSS) for seamless provider switching.
• Research and Training: Enhancing research and training capacity with better access to payments data
• Systemic Stability and Integrity: Bringing critical payment ecosystem entities under regulation and exploring a uniform Domestic Legal Entity Identifier (DLEI).
• Innovation: Exploring electronic cheques.

Specific Initiatives

1. Enable / disable transactions on any digital payment mode: Customers currently have the ability to switch domestic and international card transactions on or off, enhancing control; extending this feature to all digital payment modes is proposed to strengthen consumer confidence and help prevent fraud.
2. Reports on cross-border payments: RBI will publish reports on cross-border payments providing comprehensive analysis of key metrics, tracking global legal, regulatory, and technological developments, benchmarking India's progress against global trends, and identifying areas for improvement and implications for the domestic payment system.
3. Review of cross-border payments ecosystem: Cross-border payments are critical for trade and remittances, supporting MSMEs in accessing global markets and reducing remittance costs, but remain complex due to multiple participants and regulatory factors. RBI aims to further improve efficiency through regulatory and technological measures by undertaking a comprehensive review to identify frictions and develop a more efficient, transparent, resilient, and inclusive cross-border payments framework that fosters innovation, competition, and alignment with global best practices while addressing national requirements.
4. Cross-border payment authorisation under PSS and FEMA: Entities currently require separate authorisations under the Payment and Settlement Systems Act, 2007 and FEMA, 1999 for cross-border fund transfers; introducing a single-window application process is proposed to improve efficiency, ease of doing business, and enable new use cases and innovation in cross-border payments.
5. Limiting liability of customers - Shared responsibility framework: The current limited liability framework places liability for payment fraud solely on the issuer; a proposed shared responsibility model would make both the issuer and beneficiary banks jointly liable, incentivising stronger fraud prevention, better coordination, and enhanced consumer protection and trust.
6. Small Payment System Providers (SPSP) - Perpetual Regulatory Sandbox: Given the dynamic nature of the payments sector, it is proposed to allow innovative solutions to operate without immediate regulation, introducing oversight only when activities become significant or critical; accordingly, recognising SPSPs without prior authorisation is being explored, alongside a shift to risk-based, activity-driven regulation to support ease of doing business while maintaining systemic stability.
7. Payments Research and Training Capacity: To keep pace with evolving payment technologies, it is proposed to strengthen research and training capacity across areas such as policy, risk, fraud, cross-border payments, and cybersecurity, along with building linkages with central banks, international bodies, Global South countries, and domestic stakeholders to enable knowledge sharing.
8. Interoperability and Innovation in TReDS: TReDS has become a key platform for addressing MSME liquidity and growth, and further improvements are proposed to enhance efficiency, including enabling full interoperability across platforms, introducing factoring with recourse, and expanding receivables discounting to export MSMEs to create a more integrated and accessible ecosystem.
9. Cyber Key Risk Indicators (KRI) framework for non-bank Payment System Operators (PSOs): A Cyber KRI framework for non-bank PSOs will be developed to enable consistent, data-driven, risk-based IT supervision, allowing continuous monitoring of cybersecurity, comparison of resilience across entities, tracking of security posture over time, and early identification of potential cyber risks.
10. Review features of cheques & introduction of electronic cheques: A review of cheque design and security features will be undertaken to address variations across banks, enhance uniformity, strengthen fraud prevention, and align with evolving processes by adopting best practices; additionally, the introduction of electronic cheques will be explored to combine the benefits of paper instruments with the speed and reliability of digital payments.
11. Enhanced access to payments data: With the growth and increasing complexity of India's digital payments ecosystem, a unified, user-friendly database accessible through AI-based tools is proposed to provide a single point of access for cross-border payments data, enhance transparency, enable efficiency monitoring, and support data-driven innovation.
12. Reimagine card payments in India: An open and interoperable card ecosystem is proposed to foster competition, innovation, and resilience, while empowering users with choice, enabling secure tokenisation and orchestration, and ensuring transparent pricing to strengthen customer protection.
13. Payments Switching Service (PaSS): To address challenges in managing payment instructions when account details change, PaSS is proposed as a centralised system to enable seamless migration of incoming and outgoing payment instructions, allow customers to view and switch payment flows with authorisation, and enhance control, ease of transition, competition, and overall customer experience.
14. Expanding the regulatory ambit: With the growing role of various entities, including e-commerce platforms, in digital payments, their impact on the ecosystem will be assessed and, if necessary, brought under direct regulation; similarly, introducing white-label solutions in AePS and regulating such assisted payment providers is proposed.
15. Uniform Domestic Legal Entity Identifier (DLEI): To improve risk management through better identification of transaction parties, the feasibility of introducing DLEI for non-individuals will be studied, potentially by creating a new identifier or adopting an existing one.

We are continuously engaged with the RBI for EoDB and other regulatory reforms. For more information, please reach out to Ayush Raj at Ayush@nasscom.in.

RBI

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Associate - Public Policy