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Change scope of ‘full and direct regulations’ for payment aggregators and gateways: Cashless Consumer to RBI

Cashless Consumer has recommended full and direct regulation of payment aggregators and payment gateways, "with significant changes to scope and modalities of regulation". It also said that RBI should not prohibit PAs and PGs from dealing with merchants who do not have a physical presence in India. Cashless Consumer made these recommendations in its submission to the Reserve Bank of India in response to the RBI’s discussion paper on guidelines for PAs and PGs. Cashless Consumer is a consumer awareness collective that focusses on digital payments. The key recommendations have been summarised below:   Recommendation 1: Implement on-tap licensing/authorisation notified for payment aggregators and payment gateways. This is because existing PAs and PGs do not have any licensing criteria. Recommendation 2: Do not prohibit PGs and PAs from dealing with merchants who do not have a physical presence in India as it limits the scope of e-commerce businesses that act as payment intermediaries. Substitute "physical presence of merchants" with "legal entity identifier/bank account in the country" instead. Recommendation 3: Impose a multi-tier approach for capital requirements which is proportional to transaction processing volume to help new entrants enter the PA/PG scene without compromising on consumer protection needs. As it is, PAs and PGs do not handle funds; Funds are held by banks even when they are in transit. Recommendation 4: PAs/PGs must not share consumer data as this will violate the privacy of consumers. The consumer data is used by PAs/PGs for transaction purposes and should not be used for credit profiling/monitoring.…

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