INDIA Trends and Developments Contributed by: Shilpa Mankar Ahluwalia, Himanshu Malhotra and Lidia K. Kharmih, Shardul Amarchand Mangaldas & Co
In another significant move, the RBI increased transaction limits under the Unified Payments Interface (UPI) Lite framework, which facili - tates small-value offline payments. The limit per transaction has been raised from INR500 to INR1,000, with the total limit (at any point in time) increased from INR2,000 to INR5,000, promot - ing wider usage of UPI Lite for everyday transac - tions. Additionally, in a move to further deepen interoperability in peer-to-peer payments, the RBI enabled UPI payment transactions (through linked PPI accounts) through third-party UPI applications. These regulatory initiatives highlight the RBI’s commitment to fostering innovation, inclusiv - ity and efficiency within the digital payments space. By addressing operational challenges and improving user experience, these measures are poised to further accelerate the adoption of digital payment systems across diverse seg - ments of the Indian population. Customer protection With consumer protection being a cornerstone of its regulatory objectives, the RBI has imple - mented a series of measures aimed at enhanc - ing transparency, promoting competition and safeguarding the interests of users of digital payment facilities – particularly credit and debit card users. These measures address a range of concerns related to card issuance, operational practices, data privacy and user convenience. One of the key developments involves offering customers greater freedom in selecting their pre - ferred card network for credit cards. Historically, the choice of a card network was determined by bilateral agreements between the card issu - er and the card network(s), limiting consumer choice. Recognising the restrictive nature of these arrangements, the RBI has mandated that
card issuers must not enter into agreements that prevent them from using the services of other card networks. Additionally, card issuers are now required to provide eligible customers with the option to choose from multiple card networks at the time of issuance. Existing cardholders will be given this choice during the next renewal of their credit cards. However, card issuers with fewer than 10 lakh active credit cards are exempted from the requirement to provide their customers with their option to choose from different card networks, and card issuers operating on their own authorised card network are exempt from all the said requirements. Further, the RBI introduced several reforms to streamline the operations of business/corporate credit cards. Card issuers are now obligated to implement strict mechanisms to monitor the end use of funds associated with business credit cards. For business cards where liability rests entirely with the business entity, the timeframe for payment and/or adjustment can be mutually agreed upon by the issuer and the entity. Addi - tionally, card issuers are now allowed to offer their cardholders the option to modify their bill - ing cycles multiple times, but are mandated to provide such option at least once. To enhance product diversity, card issuers can offer alterna - tive form factors, such as wearables, alongside traditional plastic cards. The RBI has further clarified the role of co- branding partners in co-branded card arrange - ments in relation to storage of, and access to, transaction data. While co-branding partners are not permitted to access transaction data, if the partner intends to display transaction-related information to the customer on the co-branding partner’s platform, the data must be encrypted to ensure that the co-branding partner does not have visibility or access to the actual transac -
322 CHAMBERS.COM
Powered by FlippingBook