Spice Money: Industry Monitoring 08 February 2019
- Priyanka Kanodia
- Feb 8, 2019
- 6 min read
Spice Money
Industry News
Fintech lobbies approach RBI with alternatives to Aadhaar-based eKYC
Publication- Tech Circle
Edition- Online
Date- 08 February, 2019
Industry bodies representing fintech companies have approached the Reserve Bank of India (RBI) with alternatives to Aadhaar-based digital verification for signing up new customers. A Supreme Court judgement in September had scrapped the practice of private firms seeking the 12-digital identification number as part of the electronic know- your-customer (eKYC) procedure. This had resulted in businesses moving to paper-based KYC, thereby driving up costs. Fintech firms, digital lenders and others subsequently saw a slowdown in business as they looked for alternatives to Aadhaar-based e-KYC. Digital India Collective for Empowerment (DICE), a body which represents emerging technology companies, and Digital Lenders Association of India (DLAI) have separately reached out to the country’s banking regulator offering remedies.
DICE co-founder Saranya Gopinath said that the communication was intended to address the current needs of the ecosystem and it has received some responses from the regulator for continued engagement on the topic. The 14 signatories to the communication sent out by DICE on January 31 include BankBazaar chief executive Adhil Shetty and working group lead for eKYC at the organization. SBI Cards and Payments Services Ltd and Eko India Financial Services are also among the signatories
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RBI to regulate payment gateway providers: Digital payments likely to get safer
Publication- The Economic Times
Edition- Online
Date- 08 February, 2019
In another move to make digital payments safer, Reserve Bank of India (RBI) proposes to regulate payment gateway service providers and payment aggregators. This would mean that payment gateways such as Paytm, Mobikwik, Bharat Bill Pay and so on would have to adhere to RBI guidelines just as many other financial entities have to do. Consequently, these gateways can be expected to become more transparent and accountable in their working thereby benefitting common people using them for making digital payments. RBI, in a press release dated March 30, 2017 regarding advisory on e-wallets, had said that intermediaries like aggregators and payment gateways that facilitate payment services and not authorised by the central bank, have to route their transactions through a nodal account opened with a bank under Reserve Bank's guidelines of November 24, 2009. The 2009 guidelines issued in this regard asked for the maintenance of nodal accounts of intermediaries like payment gateway providers and payment aggregators.
As per the 2009 guidelines, all accounts opened and maintained by banks facilitating collection of payments by intermediaries from customers of merchants, will have to be treated as internal accounts of the banks. While it is left to the banks to decide on the exact nomenclature of such accounts, it shall be ensured that such accounts are not maintained or operated by the intermediaries. Banks shall ensure that the process of converting all the existing accounts maintained and operated by intermediaries for the purpose covered in these directions shall be completed within three months of issuance of these directions, as per the guidelines.
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RBI move to regulate digital payments may secure, stabilise ecosystem
Publication- ET Tech
Edition- Online
Date- 08 February, 2019
The central bank on Thursday said it is examining the possibility of bringing operators under its direct regulatory ambit, a move that industry players said will make the digital payments ecosystem more secure and stable. "We are considering the feasibility of directly regulating these payment operators...given their growing importance in the payment systems of the country, we deem such a step to be important," Reserve Bank of India governor Shaktikanta Das said during his monetary policy speech. The RBI said it will soon publish a draft of the regulatory guidelines for stakeholder consultations.
Mint Road and New Delhi have been in talks for some time now to come up with a comprehensive regulatory solution for the burgeoning payment systems in the country, which is riding the growth of ecommerce and m-commerce transactions. Meanwhile, issues ranging from the fees that businesses pay for accepting digital payments to grievance redressal for failed transactions and even distinction of the types of payment gateway entities have emerged as major points of contention among the payment firms, banks and their customers..
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RBI to come out with paper on payment gateways
Publication- The Times of India
Edition- Online
Date- 08 February, 2019
The plans to come out with a discussion paper for the regulation of payment gateway and aggregators like , India, , and TechProcess Solutions as it looks to ensure consumer grievances are addressed. The central bank also aims to get a more direct oversight in the fast-growing digital payments market. “Given the increasing role and importance of such entities…the RBI has been examining the need and feasibility of regulating payment gateway service providers and payment aggregators.
A discussion paper on comprehensive guidelines covering payments-related activities of these entities will be placed in the public domain for consultation with stakeholders,” the central bank said on Thursday. The RBI has been in talks with payment gateway players for over the last two quarters to make sure they don’t become part of any failure in the industry. Players also said that if payment gateways become regulated, it will allow the RBI more control over pricing and merchant discount rate (MDR) — the commission banks charge merchants for use of credit and debit cards. “Currently, we process nearly 1.5 lakh crore of payment transactions every year. As these transactions keep growing, consumers expect faster payment services. We expect the RBI to help in making payments faster and more secure,” said PayU India CEO . RBI BillDesk PayU CCAvenue Razorpay Amrish Rau.
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Federal Bank initiates Open Banking Platform for fintech cos
Publication- Money Control
Edition- Online
Date- 08 February, 2019
Federal Bank has unveiled an Open Banking Platform to enable Fintech companies and start-ups to use the bank’s APIs to come up with innovations and create new products for banking services. The platform is aimed at allowing startups, corporates, and FinTech to generate value with smart integration. The initiative is expected to provide an opportunity to fintechs and other entities to build and test the applications which will cater to various business requirements in areas such as fund transfers, smart collections, UPI payments and digital credit.
Federal Bank’s digital infrastructure caters to customers in different parts of the world. According to the bank, around 16 percent of foreign inward remittances of India is done via Federal Bank’s API platform. The Federal Bank API’s are effectively used by Google Pay, Seynse Technologies and Airtel, an India Infoline report says.
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UPI transactions hit a record 672.75 million in January: NPCI
Publication- Money Control
Edition- Online
Date- 08 February, 2019
The Unified Payment Interface (UPI) witnessed a record number of transactions in January and amounted to more than Rs 1 lakh crore in value, according to data released by NPCI (National Payment Corporation of India), the Livemint reports. The transaction volume grew by 8.5 percent to Rs 1.09 lakh crore in January, up from Rs 1.02 lakh crore in the month of December 2018. December was also the month when UPI recorded over 600 million transactions for the first time ever, the report states.
UPI was introduced by NPCI in 2016 as a platform that powers multiple bank accounts into a single mobile application. UPI got a significant boost when the BHIM app was launched by the Central government on the 30 December 2016. Since then, NPCI has taken steps to cut down fraudulent transactions and introduced many regulatory guidelines. Out of the total transactions registered in January, 13.98 million transactions were conducted through BHIM app alone, the data shows.
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Credit Suisse tests blockchain for processing fund trades
Publication- Reuters
Edition- Online
Date- 08 February, 2019
Credit Suisse’s asset management arm has successfully tested blockchain to process investment fund trades, the latest financial institution to show an interest in technology that could speed up transactions and keep them secure. Credit Suisse Asset Management used a blockchain-based platform to process an unspecified number of trades, an online bank and an order-routing platform involved in the test said.
Portugal’s Banco Best and Luxembourg-based platform Fundsquare said in their statement after the test that it had showed cross-border distribution over blockchain was “more efficient, scalable and timely in processing.” Credit Suisse confirmed the test was conducted but did not say whether the asset management arm, which managed funds worth more than $400 billion as of September, would use the technology more widely. The investment fund industry relies heavily on transactions and settlements that are often complex and time consuming to process. Blockchain, a technology first conceived to underpin the cryptocurrency bitcoin, is a shared database designed to process and settle transactions swiftly. Entries cannot be changed, so fewer checks are required to ensure trades are secure.
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