RBI’s e-payments rules will create challenges for merchants, small businesses, banks, others
Payment aggregators, gateways, traders, small businesses, banks, and others will face demanding situations because of the Reserve Bank of India’s framework for processing e-mandates for routine on line transactions and recommendations associated with the Payment Aggregators and Payment Gateways (PAPG) to cope with records protection and privateness concerns, says experts.
In a webinar to provide customers with a seamless payment experience, the expert group Empower India stated that following these guidelines may lead to more fraudulent activities, failed transactions, reduced consumer choice and portability, and hindered user experience and customers Satisfaction. And product innovation is limited. The research team said: “Not only are payment aggregators and payment gateways facing challenges, but banks, subscription-based services, a wide range of merchants and small business owners, and even consumers are also facing challenges.”
“In terms of data privacy, unless there is a large-scale data breach, supervision should not be too strict. We have a huge cash economy, and the only way to solve it is through digital payments. The Reserve Bank of India has the right to ensure that financial data is not stolen and consumer data is protected, but not in the way they are attempting to do so by regulating merchants,” said Dr. Aruna Sharma, former Secretary to the Government of India.
According to the recommendation of the Reserve Bank of India
, as of September 30, 2021, banks must notify their customers before and after any recurring debits, and this demand has nothing to do with payment channels. “However, there are some disadvantages because the e-mandate only applies to a small part of the trade community. In addition, the Reserve Bank of India has issued PAPG guidelines to address data privacy and security issues related to card-on-file (COF) and prevent commercial websites from saving customer card details.
These rules create an “unusual situation” for merchants and payment aggregators, who will deal with customer complaints, but will not be able to solve these problems until banks and card networks adopt their solutions. Although the security and privacy concerns are valid, they must be balanced with the simplicity and convenience of digital transactions.
If merchants and payment aggregators were forbidden to keep card information on file, they would not be able to provide seamless payment solutions for recurring one-click online payments, according to the think tank. This will prevent the end user from manually entering information for each transaction. According to Empower India, this will make digital transactions difficult, time consuming and inconvenient, hindering a large number of customers.
There will only be three or four significant players who can comply with the overregulation of security and e-commerce. Overregulation in India is a common cause of the demise of significant companies. Rather than copying China’s approach, the Indian government should learn from other nations and how they have handled regulation of similar firms in the digital payments sector. Montek Singh Ahluwalia, former Chairman of the Indian Planning Commission, said: “It is important for India to maintain the flexibility for its growth.