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Reserve Bank of India Flags Unauthorized Payment System Linked to Card Network

New Delhi: The Reserve Bank of India has raised concerns over a payment system associated with a card network that facilitates businesses to make card payments through specific intermediaries to entities not accepting card payments.

Upon investigation, it was found that this system qualifies as a payment system under the Payment and Settlement Systems (PSS) Act, 2007, requiring authorization, which was not obtained in this case, rendering the activity unauthorized.

Furthermore, the arrangement has raised apprehensions regarding the pooling of funds into non-designated accounts and non-compliance with KYC requirements.

This system has only been operationalized by one card network in the country. As a result of the ongoing examination, the card network has been instructed to suspend all such arrangements until further notice. It’s emphasized that normal usage of business credit cards remains unaffected by this directive.

Tags: BFSI