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The Reserve Bank of India’s (RBI) directive on foreign settlement of online transactions using credit cards may end up having an unsettling effect on global technology companies in the country which enable this service. Payment companies, which are a tad worried, have already sought relaxation in the ruling.
“We may ask the regulator, that below a certain ticket size, there should be no two-step authentication on credit card payments online,” Uttam Nayak, Visa's country head (India and South Asia), told FE.
According to the Visa official, many international merchants have registered themselves in India and route their payments through Indian banks. However, the two-step authentication is expected to be a little cumbersome. Under the two-step authentication process, every transaction gets realised only after entering a one time password (OTP) or verification services like `verified by Visa'.
The RBI on Friday had issued a notification saying that some foreign entities were flouting credit card transaction rules and were in violation of the Foreign Exchange Management Act. It asked firms to have a two-step authentication and directed them to be done through a bank in India with payments made in rupees. Jairam Sridharan, head of consumer lending and payments at Axis Bank, said that it was important to to strike a balance between customer experience and security. Responding to queries from FE, Amazon India in a statement said, “We have a two step authentication process and are completely compliant.”
RBI took this decision following a complaint of local taxi aggregators against Google-funded Uber. Technology companies like Google, Amazon, Apple and Uber ask users to save their card credentials on their databases which allow them to purchase items through a single click or touch. The saving of credentials, seen as a way to make customer experience seamless, is done by using a foreign payment gateway where the two-step authentication is not required.
A spokesperson for Google said, “Google India looks at compliance issues seriously and we are looking into the RBI notification.”
Shiv Putcha, associate director, mobility at IDC, said that RBI is rightly concerned with the payment process as the digital payments is growing at a rapid pace and has a chance of affecting the forex situation of the country."We dont have a clarity yet on these payments that go overseas: whether these are service tax complaint. RBI does not want a back and forth forex transactions over which it has no control.”
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