Credit card transactions: Has RBI created an Uber-mess?
The RBI's new diktat could extend to companies such as Google and Apple, which sell content, apps and music using the same process
BS Bureau |
Last Updated at August 25, 2014 13:01 IST
The Reserve Bank of India last week said that all credit card transactions would have to follow a two-step verification process. The ostensible target of this notification was the popular taxi-hailing service Uber, which allows consumers to locate available taxis in the vicinity through the internet and summon them. Users’ credit card data is stored with Uber which deducts the fare automatically at the end of the ride and passes on the payment to the cabbie, thus saving the passenger valuable transaction time.
The RBI has said that such transactions are a violation of its card-not-present transaction norms as well as of the Foreign Exchange Management Act. While the central bank’s directive was reportedly issued at the behest of Uber’s competition – radio taxi services – its ramifications could extend to such popular service providers as Google and Apple, both of which are based overseas use a similar process for paid content and music.
A blog by economists Suyash Rai and Ajay Shah points out that the Uber model could potentially save as much as 91 million man-hours of productivity that could go into GDP growth.
Should the RBI then adopt the model for all players or should it punish Uber and the likes in an effort to prevent possible fraud and to level the playing field for all service providers? To help make up your mind, here’s a selection of Business Standard’s top stories on the whole issue.
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First Published: Mon, August 25 2014. 11:52 IST