When it comes to regulations regarding IT securities and consumer protection, the Reserve Bank of India should clearly distinguish between payment aggregators and payment gateways, Dvara Research said in its submission to the central bank. The RBI had released a discussion paper on guidelines for payment aggregators and payment gateways in September. Dvara also said that RBI should harmonise the proposed consumer grievance redressal framework with the existing consumer recourse mechanism. However, the recommendations did not incorporate important issues regarding simplifying the KYC check system for PAs/PGs and governance of e-commerce marketplaces under the proposed framework by RBI. The key recommendations have been summarised below: Recommendation 1: Provide a clear articulation of regulatory objectives so that proportionality of proposed regulations can be assessed and regulatory efforts aren't duplicated. The regulator needs to specify the financial and consumer protection risks and financial stability risks that are being addressed to assess the effectiveness of the proposed regulatory framework. For instance, the RBI’s discussion paper suggests PAs and PGs to “consider information disclosure policies, privacy policies, and digital footprints while conducting due diligence.” However, PAs and PGs may not be well equipped to analyse merchants’ privacy policy, Dvara noted. Recommendation 2: Clearly specify the distinction between payment aggregators and payment gateways. For regulations regarding IT securities, consumer protection, and contractual clarity, RBI should differentiate between PAs and PGs. The regulator should also specify the risks that this distinction is seeking to address at the functional level. Also, the definition of PAs in the…
