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Mumbai: The Reserve Bank of India (RBI) said in a statement on its website that it has asked a card network to pause payments under an arrangement that allowed businesses to make card payments to entities that did not accept such payments.
While the central bank did not name the card network, a spokesperson for Visa said in a statement on Wednesday that it received a communication from RBI on 8 February, “in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments”. The company spokesperson said: “That communication included a direction that we hold all BPSP transactions in abeyance.”
The RBI said that under the unauthorised arrangement, an intermediary would accept card payments from corporates for commercial payments and remit the funds through Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and National Electronic Fund Transfer (NEFT) to recipients that don’t accept card payments.
“On closer scrutiny, it was observed that this arrangement qualified as a payment system. Under the provisions of Payment and Settlement Systems (PSS) Act, 2007, such a payment system requires authorisation under Section 4 of PSS Act, which has not been obtained in the instant case,” the RBI statement said.
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Published: 15 Feb 2024, 10:49 PM IST
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