August 24, 2014 1:40:16 am
The Reserve Bank of India has said that settlement of transactions using credit cards online for purchase of goods and services within the country will have to be done through a bank in India and that the payments must be made in rupees.
The move could hurt e-commerce platforms and taxi aggregators such as Uber and Google Play as these firms allegedly route credit card transactions through an international payment gateway and circumvent the two-step verification mandated by
The announcement comes after local taxi companies had complained that Uber was not following the two-step verification process required for credit card transactions in India.
All Uber payments are directly processed using the customers stored credit card information in a simple process that bypasses any monetary exchange between drivers and users.
Although the RBI did not specifically address any company, it noted, “It has come to our notice that despite the above clarifications there are instances of card not present in transactions being effected without the mandated additional authentication/ validation even where the underlying transactions are essentially taking place between two residents in India”.
The apex bank said that camouflaging and flouting guidelines on card security was made possible by merchant transactions being acquired by banks located overseas resulting in an outflow of foreign exchange which is in violation of violation of the directives under the Payment and Settlement Systems Act and the Foreign Exchange Management Act, 1999.
RBI said directive shall be effective immediately. “However, existing arrangements if any, will be accorded time up to October 31, 2014 to comply with our instructions, to avoid any business disruption,” it added.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.