Reserve Bank of India (RBI) is likely to take over the regulatory framework of Unified Payments Interface (UPI) from National Payments Corporation of India (NPCI). The apex banking body will create a body to regulate UPI payments.
RBI had reportedly conducted an audit on UPI but yet to take a final call, reports FactorDaily citing anonymous sources. The report of RBI possible taking over UPI has come at a time when it recently gave a dissent note that payment regulatory board should be under its purview.
“In India, the payment system is bank-dominated. Regulation of the banking systems and payment system by the same regulator provides synergy and inspires public confidence in the payment instruments,” mentioned the dissent note.
According to the report, RBI would take care of regulatory aspects while NPCI continues to work on evolving UPI as a product.
Over the past 8-10 months, there have been multiple reports outlining favourable treatment to global companies including Facebook and Google. The reports emphasised that both heavyweight firms have circumvented regulations while preparing for UPI launch.
Google had launched UPI-powered app Tez (now Google Pay) in September last year. Meanwhile, WhatsApp has not been able to open WhatsApp Pay for masses because of regulatory hurdles and concerns around data localisation.
Launched in September 2016 – UPI has emerged as the fastest medium to transfer funds and perform merchant payment. The government-owned payments railroad has recorded 405.87 million transactions worth Rs 59,835.36 crore in September 2018.
With 137 million transactions, Paytm processes the largest amount of transaction on the UPI network followed by PhonePe and Google Pay. The trio holds over 90 per cent of overall UPI transaction volume.
Experts believe that dealing with the UPI system won’t be easy for the banking regulator as WhatsApp and Google Pay have been alleged of circumventing guidelines time and again. With the growth of UPI volume, it requires a more holistic set of guidelines to secure users data and money.