Top 5 Changes Fintechs Must Make to Meet RBI Cross-Border Payment Standards

On Friday, August 30, 2024, the Reserve Bank of India (RBI) outlined its vision for revolutionizing cross-border payments in the country. Speaking at the Global Fintech Fest, T. Rabi Sankar, Deputy Governor of the RBI, emphasized the need to remove inefficiencies in the system and bring about the same level of efficiency as domestic payments.

Self-Regulatory Organizations (SROs): Ensuring Responsibility and Fair Pricing

Charting the roadmap for SROs, the first of which was registered on Wednesday, Sankar stated that these organizations should prepare the sector to demonstrate the same level of responsibility as traditional banks and finance companies as the sector matures. SROs have also been tasked with ensuring fair pricing and checking the practice of ‘dark patterns’ – deceptive tactics in software that manipulate users into making unintended decisions.

The ‘India Model of Digitization’: Creating Digital Public Infrastructure

Sankar also highlighted the ‘India model of digitization’, which involves creating digital public infrastructure in the public sector and allowing for innovation and product creation in the private sector to make it widely available. This approach aims to foster a collaborative ecosystem that leverages the strengths of both sectors to drive progress in cross-border payments.

Internationalization of UPI and Expansion of Financial Messaging Systems

P Vasudevan, Executive Director of the RBI, revealed that the Unified Payments Interface (UPI) is being internationalized so that the same app can be used in different countries. This move is expected to enhance the accessibility and convenience of cross-border transactions for users.

Furthermore, the RBI is working to make its Structured Financial Messaging System (SFMS) global. Vasudevan noted that the volume SWIFT processes for cross-border transactions is much lower than that of SFMS. The RBI is also considering making its Indian Financial Network (INFINET) available to others, ultimately offering a comprehensive technology stack for cross-border payments.

Fostering a Secure and Resilient Financial Ecosystem

By leveraging its domestic financial infrastructure and expertise, India aims to create a secure and resilient ecosystem for cross-border payments. Vasudevan expressed the RBI’s intention to “ring-fence” itself from external events by making its technology stack available to others. This approach underscores India’s commitment to building a self-reliant and globally connected financial system.

The Future of Global Fintech Fests

The RBI also announced its plans to hold the Global Fintech Fest in other countries in the future. This move suggests a desire to share India’s experiences and learnings with the global community, fostering international collaboration and knowledge exchange in the fintech space.