India’s central bank on March 3 imposed a monetary penalty of Rs 3.06 crores on Amazon Pay, the payments processing arm of e-commerce giant Amazon, for non-compliance with certain provisions of the Know Your Customer (KYC) and Prepaid Payment Instrument (PPI) norms.
Specifically, Amazon violated the Master Directions on Prepaid Payment Instruments (PPIs) dated August 27 and the Master Direction – Know Your Customer (KYC) Direction, 2016 dated February 25, 2016, the Reserve Bank of India (RBI) stated.
RBI didn’t provide any specific details of how Amazon Pay violated the above norms.
Why does this matter: Amazon Pay has applied for a payments aggregator (PA) license and currently has in-principle authorisation to operate as a payment aggregator from RBI. The company is yet to get a final authorisation. If such instances of non-compliance with RBI norms hurt Amazon’s application in any way, it would be a setback to the company in a highly competitive market.
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Amazon was given a chance to explain: “It was observed that the entity was non-compliant with the directions issued by RBI on KYC requirements. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions,” RBI said.
“After considering the entity’s response, RBI concluded that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty,” the central bank added.
Does not affect Amazon Pay customers: “This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” RBI clarified.
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