Explained: RBI's new digital payment system to protect payments against digital attack, natural disasters
The lightweight payment and settlement system (LPSS), which the RBI plans to develop, will be able to function without a lot of personnel and from any location.
Nowadays everyone relies on digital payment systems, UPI being one of the most famous methods for digital payment systems in today’s era. Due to the growing reliance on digital payments, the Reserve Bank of India will launch a new payment system that uses cutting-edge technology. With this, users will be able to make payments even in case of an emergency. Let us know what is this digital payment system of RBI.
What is RBI’s new digital payment system?In its annual report, the Reserve Bank of India stated that it is developing a system that would enable consumers to make digital payments during emergencies like war or natural disasters. Even in an emergency, this system shouldn't permit any obstacles to digital payments. It should be noted that the new payment mechanism will change significantly from the current one.
The name of this system is Light Weight and Portable Payment System (LPSS). The new system will be made available on a "need basis" and will complement the wide range of payment platforms currently offered in the nation.
"Such a lightweight and portable payment system could ensure near-zero downtime of payment and settlement system in the country and keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions," the central bank said.
Why is the new payment system (LPSS) being created?It's important to note that the nation now uses payment systems including Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT), and Unified Payments Interface (UPI). The biggest drawback of these payment systems is that you cannot use all of them in an emergency. Better IT networks and infrastructure are required for all of these payment schemes. In such a scenario, consumers will be able to make payments via the LPSS payment system even in times of war or other natural disasters.
How will the new payment system (LPSS) work?The largest question in such a circumstance is how this system would function; in response, states that it is a light, functional system with minimal hardware and software. It is a mobile system that can be adjusted to fit any changing circumstances. Making digital payments will be simple with such a flexible payment system, even in an emergency.
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