RBI Halts Unauthorized Payment System, Puts a Check on Card Network's Unsanctioned Arrangement

 RBI ने अनधिकृत भुगतान प्रणाली रोकी, कार्ड नेटवर्क की अस्वीकृत व्यवस्था पर लगाम लगाई

Date:February 15, 2024

In a regulatory move, the Reserve Bank of India (RBI) has uncovered and restrained an unauthorized payment system employed by a Card Network. The arrangement allowed businesses to make card payments through specific intermediaries to entities that don't traditionally accept card transactions.

Key Points:

- The Card Network's arrangement involved intermediaries accepting card payments from corporations for commercial transactions, subsequently transferring funds via IMPS/RTGS/NEFT to non-card accepting recipients.

  

- After thorough examination, the RBI identified this setup as a payment system requiring authorization under Section 4 of the Payment and Settlement Systems (PSS) Act, 2007, which was lacking in this case.

- Concerns raised include the pooling of substantial funds into an account not designated under the PSS Act and transactions failing to comply with originator and beneficiary information requirements, as per RBI's Master Direction on KYC.

- The RBI has advised the Card Network to suspend all such arrangements until further notice. It's emphasized that there are no restrictions on the regular use of business credit cards.

This regulatory intervention showcases the RBI's commitment to ensuring the legality and compliance of payment systems, safeguarding the financial ecosystem. The halting of the unauthorized arrangement aims to maintain the integrity and security of card transactions in the country.