wordpress blog stats
Connect with us

Hi, what are you looking for?

Meru Cabs asks RBI to extend recurring payment rules to foreign players like Uber

Meru Cabs Logo

Mumbai-based radio cab service Meru Cabs has asked Reserve Bank Of India to extend its recurring billing guidelines to foreign players as well, thereby creating a level playing field among domestic and International players, reports The Economic Times. (hat tip – Rohin Dharmakumar)

Meru says foreign players like Uber are able to circumvent the mandated two-stage credit card authentication by routing their transactions through foreign payment gateways, on which RBI has no jurisdiction. This allows them to store credit card details and use them for recurring transactions without the RBI’s mandated 2-factor authentication.

The report also points out that Uber can also charge consumer’s credit card directly in case of taxi cancellations, which is currently not available for any other Indian taxi players. This could be important for taxi players since  the cancellation rates are apparently as high as 12% after a cab has arrived.

Meru Cabs CEO Siddhartha Pahwa told the publication that RBI officials understood their requests and have told them that they will look into this issue.

Why recurring payments are important?

Advertisement. Scroll to continue reading.

Note that Google and Apple also use similar foreign payment gateways on their respective app stores, due to which users don’t have to go through a 2-factor authentication while buying apps.

For a buyer, this is an ideal scenario, since it paves the way for one-click transactions – the business stores your credit card information, and the moment there is a transaction initiated, it bills you without any need to go through a 3D secure page, to enter your CVV for authentication. For a business, it ensures high conversion rates – the shorter the time between intent to purchase and the completion of the actual purchase, the greater the likelihood that the purchase will be completed.

The problem is that Indian businesses can’t offer the same functionality to its users as per RBI’s recurring billing guidelines, which mandates them to direct users through a “Verified by Visa” or “Mastercard Secure” layer, and on mobile through the one time password process which doesn’t work several times. Due to this, several entrepreneurs are also apparently registering their companies abroad. 

Last October, Vineet Durani, Director, Windows Phone Business Group at Microsoft had told Medianama that Apple was sitting on a time bomb in India with iTunes payment gateway since its possible that “someone will wake up one day and ask why there is no two-step authentication and possibly cut them off”.

Tax from foreign companies? The current guidelines could also mean that India might be losing out on tax income from businesses like Google (via Ireland?), Facebook, Apple, among others, and there is some kind of incentive to route billing through International payment gateways. PayU India CEO Nitin Gupta told the publication that these guidelines have also led to companies choosing to integrate International payment gateways over Indian payment gateways to their respective offerings.

We think that the regulations need to be applied equally to those doing businesses in India and/or with customers in India. Ideally, the second layer of authentication should go.

Advertisement. Scroll to continue reading.

Also read:

– How India’s Banks Killed The Future Of Commerce – Hrush Bhatt, Cleartrip
– Probir Roy: OTP Hit Paymate’s Domino’s Account; No KYC For Small Payments
Note To RBI: Need A Level Playing Field In Online Billing In India

Written By

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



The Delhi High Court should quash the government's order to block Tanul Thakur's website in light of the Shreya Singhal verdict by the Supreme...


Releasing the policy is akin to putting the proverbial 'cart before the horse'.


The industry's growth is being weighed down by taxation and legal uncertainty.


Due to the scale of regulatory and technical challenges, transparency reporting under the IT Rules has gotten off to a rocky start.


Here are possible reasons why Indians are not generating significant IAP revenues despite our download share crossing 30%.

You May Also Like


Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...


135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...


Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...


By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ