BL Explainer – Geolocation of payment system contact points and its advantages

What is geolocation of payment system contact points?

Geotagging refers to the process of adding geographic identification to media based on the location of smartphones or GPS-enabled electronic devices. Geotags can be applied to media such as photos, videos, websites, text messages, and QR codes. Last week, the Reserve Bank of India released a framework for payment system touchpoint geolocation, which simply means capturing the geographic coordinates (latitude and longitude) of various touchpoints deployed by merchants to receive payments. payments from their customers.

Why is this important?

From cash as the main mode of payment and the use of debit/credit cards among merchants, the Indian payments ecosystem has evolved rapidly in recent years with the widespread adoption of several payment products and systems, including point of sale (PoS) terminals, quick response (QR), prepaid payment instruments (PPI), net bank transfers, immediate payment service (IMPS), unified payment interface (UPI) and payment service Aadhar-compatible (AePS).

The penetration of smartphones and the internet has led to the proliferation of digital payments in the country. According to data from the National Payments Corporation of India (NPCI), UPI-led digital transactions crossed the highest ever value of Rs 81-lakh crore with 5.42 billion transactions during the financial year 22. However, a large number of people, especially in rural parts of the country, continue to use cash as their primary mode of transaction. RBI’s geolocation framework focuses on deepening digital payments and providing inclusive access to all citizens, regardless of location or digital literacy.

How it works?

The central bank has classified “banking infrastructure” and “payment acceptance infrastructure” as two categories of physical infrastructure through which digital payment transactions are conducted. Banking infrastructure covers payment transactions made through bank branches, tellers, ATMs, and cash dispensers (CRMs), among others. While PoS terminals, QR codes deployed by banks/non-bank payment system operators (PSOs) fall under the payment acceptance infrastructure. The RBI framework requires banks and non-bank PSOs to maintain a register with the precise location of all payment touchpoints across the country. The register should contain merchant information such as merchant name, identifier, type, category, contact information as well as location details such as address and state, district. Banks and non-bank PSOs must also report payment acceptance infrastructure details such as terminal type, terminal ID, terminal address, state, district and geographic coordinates .

How will this benefit banks and payment ecosystem players?

By capturing the precise location of various payment system touchpoints, banks can gain insight into regional penetration of digital payments, monitor infrastructure density at different locations, identify opportunities for touchpoint deployment additional payments and facilitate targeted digital literacy programs. The data collected by geolocation will also help the central bank to deliver appropriate policy interventions wherever needed.

When will it be implemented?

All banks and non-bank PSOs are required to report payment system touchpoint information through the RBI’s Centralized Information Management System (CIMS). However, the central bank has yet to release the timeline for the start of the statement. For now, the RBI has requested banks and non-banking PSOs to submit details of the nodal agent for this activity by March 31, 2022.

Published on

April 08, 2022

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Elaine R. Knight