On 11th October 2017, RBI came out with a comprehensive “Master Direction” applicable to all Prepaid Payment Instrument Issuers, System Providers and System participants. This was mainly a consolidation of all earlier guidelines. However, it appears that some of the participants have already felt the need to approach RBI for diluting the norms.
The Payment Council of India, (PCI) an industry organization has represented that “Some of the new norms could severely cripple the industry and make the wallet business unviable,”
It is reported that among the major points of concern, according to industry members, are the demand for a mandatory full KYC or know your-customer certification, phased introduction of interoperability and restriction of peer-to-peer fund transfer in semi-KYC wallets.
The objection has been raised on the point “Another major hurdle for payment companies is prohibition of inter-wallet transactions, along with transfer of funds from bank account to wallet from semi-KYC accounts, which the companies believe will destroy the relevance of mobile wallets.”
According to the spokesperson, “The scope of fraud is more in moving money through debit or credit cards into wallets and then siphoning it off to other bank accounts. P2P fund movement is not risky that way. We had made multiple representations to the RBI on this,”
They feel that “doing a full-KYC to open a digital wallet every time will be a major hindrance for smooth business”.
The PCI representatives are likely to meet RBI officials and lobby for dilution of the norms.
In the light of the above, we need to take a comprehensive analysis of the objections raised by PCI vis-a-vis the guidelines and the risks faced by the public and whether there is actually scope for further hardening of the security measures.
We shall analyze the Master directions and the objections raised in the articles to follow.