RBI asks Visa to stop unauthorised commercial payments
The Reserve Bank on Thursday asked card network Visa to stop making payments through intermediaries to entities which do not accept card payments, saying a large amount of funds are involved in the activity without legal sanction, according to sources.
PTI
Mumbai, 15 Feb
The Reserve Bank on Thursday asked
card network Visa to stop making payments through intermediaries to entities
which do not accept card payments, saying a large amount of funds are involved
in the activity without legal sanction, according to sources.
The Reserve Bank on Thursday asked card network Visa to stop making payments through intermediaries to entities which do not accept card payments, saying a large amount of funds are involved in the activity without legal sanction, according to sources.
Visa did not immediately offered
any comments, but indicated it may come with one later.
The central bank said as the matter
is under detailed examination, the card network has been advised to keep all
such arrangements under abeyance, till further orders. "It has come to the
notice of RBI that a card network had an arrangement that enables businesses to
make card payments through certain intermediaries, to entities that do not
accept card payments," the central bank said in a statement.
Under this arrangement, the RBI
said the intermediary accepts card payments from corporates for their
commercial payments and then remits the funds via IMPS/RTGS/NEFT to non-card
accepting recipients.
On closer scrutiny, the RBI found
that the arrangement qualified as a payment system and under the provisions of
Payment and Settlement Systems (PSS) Act, 2007, such payment system requires
authorization, which has not been obtained in the instant case. "The
activity was, therefore, without legal sanction," RBI said.
The central bank further said the
arrangement has raised concerns as the intermediary in the arrangement pooled
large amount of funds into an account which is not a designated account under
PSS Act. "Transactions processed under this arrangement did not comply
with the originator and beneficiary information requirements, as stipulated
under Master Direction on KYC issued by the Reserve Bank," the RBI said.
The central bank also clarified
that it has not placed any restriction with respect to normal usage of business
credit cards.
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