In its recent regulatory order, the Reserve Bank of India has asked the Visa card network not to use the payment system without legal approval. According to the Reserve Bank, the card network had made such an arrangement by which business units could make card payments through some intermediaries even to those units which do not accept card payments.
The Reserve Bank of India (RBI) has clarified that ‘One Card Network’ has been barred from illegal card payment system and there is no restriction on the normal use of business credit cards. The Reserve Bank’s Statement comes after reports that card networks like MasterCard and Visa have banned card-based commercial payments made by companies and small units.
In its recent regulatory order, the Reserve Bank of India has asked the Visa card network not to use the payment system without legal approval. According to the Reserve Bank, the card network had made such an arrangement by which business units could make card payments through some intermediaries even to those units which do not accept card payments.
The intermediary accepted card payments from corporates for its commercial payments and sent the same through IMPS/RTGS/NEFT to entities which do not accept card payments. The statement issued by the regulator said, ‘After careful investigation, it was found that this arrangement is being run under the payment system. According to the Payment and Settlement Systems (PSS) Act 2007, such payment systems require permission under Section 4 of the PSS Act, which was not taken in this case. Therefore, this activity was going on without legal approval.