NPCI’s Netbanking 2.0

The National Payments Corporation of India (NPCI)’s subsidiary, Bharat BillPay (NBBL), is set to launch a new Netbanking system (switch) aimed at improving customer experiences for online payments. This system, called Netbanking 2.0, is currently being tested and is expected to go live within the next 3–4 months.

Key Features and Benefits

New Payments Switch

• Netbanking 2.0 will not rely on existing payment systems like IMPS but will create an entirely new infrastructure.
• The aim is to provide standardized and interoperable netbanking transactions across banks, payment aggregators, and merchants, enhancing customer experience and improving operational efficiencies.

Stakeholder Involvement

• Multiple ecosystem stakeholders including banks and payment aggregators are currently involved in testing, with four major banks and 6–8 payment aggregators in the pilot phase.

Focus on Standardization

• The system will ensure common connectivity across all banks, addressing current challenges like lack of standardization, chargebacks, and settlement issues in the current network.

Multidevice Flow and Dynamic QR Codes

• One innovative feature of Netbanking 2.0 is the creation of dynamic QR codes that enable a two-device flow, facilitating smoother payment authorizations from larger workstations or laptops with mobile verification.

Enhanced Transparency and Rate Standardization

• The new system aims to bring about rate standardization across the industry, promoting transparency in pricing for payment services. This will benefit stakeholders by offering consistent payment pricing models and simplified integrations.

The Role of NPCI and Regulatory Support

NPCI’s Mandate

• NPCI continues to develop innovative payment solutions like UPI, RuPay, and the National Financial Switch, and plays a pivotal role in improving payment infrastructure in India.

Regulatory Backing

• The Reserve Bank of India (RBI) approved the project in March 2024, aligning with the Payment Vision 2025 to address delays in settlements and enhance interoperability for internet banking transactions.

Related Developments

UPI Circle Feature for BHIM

• In addition to Netbanking 2.0, NPCI has also rolled out the UPI Circle feature on the BHIM app, enabling primary users to delegate financial responsibilities to up to five secondary users.
• This new feature aims to foster a more inclusive and interconnected financial ecosystem, providing secure and flexible ways to share financial tasks.

Implications for the Payment Ecosystem

• The launch of Netbanking 2.0 promises to streamline the payment process, reduce integration complexities for merchants, and improve payment acceptance across a wide variety of sectors such as e-commerce, travel, and digital fashion platforms.

BS