The Reserve Bank of India (RBI) has issued stiff guidelines for settlement of export-related receipts through Online Payment Gateways (OPG) and decided to allow Authorised Dealers Category -1 banks to handle repatriation of export-related receipts by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSP).
Banks desiring to offer such services must obtain one-time permission from RBI and thereafter report the details of arrangement with each OPGSP as and when entered into. The OPGSPs, which are already providing such services on the basis of the specific holding-on approvals issued by RBI, must open liaison offices in India within three months and in respect of new arrangements, they must open liaison offices in India with RBI approval before operationalising the arrangement.
Many exporters display their products or services on their websites and enable the foreign buyers to purchase the goods or services on-line and to pay through their credit cards or bank accounts electronically. Many OPGSPs abroad facilitate transfer of information between a seller’s website and the buyer’s bank or a front-end processor for a certain fee. When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction. Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.
Many exporters have enlisted the specialised and secure services of OPGSPs to receive payments from customers and so arranged that the payment is sent to their accounts with banks in India immediately. RBI, however, found that some export proceeds are retained abroad in violation of Indian laws and, therefore, decided to not only restrict such facility to transactions for $500 or less but also to ordain greater disciplines.
RBI says that banks offering such facilities by entering into arrangements with OPGSP abroad must open a Nostro collection account for receipt of export-related payment. They must ensure that all receipts are automatically swept and pooled into the Nostro account and repatriated to India and credited to the respective exporter’s account with a bank in India immediately on receipt of the confirmation of the transaction from the buyer and, in any case, not later than seven days from the date of credit to the Nostro collection account. The onus of doing a due diligence of the OPGSP and verification of the bonafides of the transactions has been placed on the banks. The Nostro collection accounts can be debited only to repatriate the export proceeds to India for credit to the exporter’s account or for payment of agreed fee/commission to the OPGSP or for charge back to the buyer where the exporter has failed to honour his commitments under the sale contract.
RBI also wants each Nostro collection account to be subject to reconciliation and audit on a quarterly basis and resolution of all payment-related complaints of exporters to be the responsibility of the OPGSP concerned.
Restriction of such e-commerce facility only for transactions up to $500 in value will mainly help small exporters of books, handicrafts etc., take orders from individual buyers. RBI should find ways to help even higher value export e-commerce transactions take place through online payment gateways.