New RBI Licensing Norms For Payment Operators To Equalise Online & Offline Operators

(MENAFN- KNN India) New Delhi, Apr 15 (KNN) The Reserve Bank of India (RBI) is expected to introduce guidelines for issuing licenses to operate in the point of sale (POS) business, aiming to tighten the offline payments ecosystem.

This move will require third-party POS operators to obtain licenses to function in this space, impacting players such as Pine Labs, MSwipe, Paytm, and BharatPe, among others, reported businessline.

The objective behind introducing a licensing framework is to ensure harmony in operations and establish a level playing field between online and offline payment operators.

While regulated entities like banks and NBFCs already operating in the POS business won't be affected, third-party operators will need to obtain a license to continue their business.

The rapid growth of third-party offline payments operators, who are estimated to maintain a daily average balance of Rs 400 crore compared to Rs 1,000 crore in the online space, has strengthened the case for licensing the ecosystem. Regulatory changes are being considered before the offline market becomes too large.

It is understood that banks have recently opted to operate through third-party POS players for ease of doing business. Similar to payment aggregator licenses, POS operators may have to comply with certain norms, such as a minimum net worth of Rs 25 crore and passing RBI's fit and proper conditions.

The need for a licensing framework has assumed importance for three main reasons. Firstly, cash loans on credit cards in the informal sector and a surge in high-value, one-time swipes at POS have raised concerns about merchants potentially handing out cash for these swipes.

Secondly, data storage practices for POS transactions vary among third-party operators based on internal agreements with issuing banks, necessitating harmonisation for security reasons.

Thirdly, concerns exist about fund management by unregulated third-party players, as settlement to merchants is not instantaneous, and there is a risk of fly-by-night operators winding down with the money.

(KNN Bureau)

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