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Companies must apply 2-step payments for credit cards, says RBI
Mumbai (23rd August, 2014): The Reserve Bank of India (RBI) said that all transactions involving domestic credit cards must follow rules requiring additional verification, a stance that could impact companies such as Uber Technologies Inc that provide more simple app-based purchases.
The announcement on Friday comes after local taxi companies had complained that Uber was not following the two-step verification process required for credit card transactions in India, according to media reports.
All Uber payments are directly processed using the customer's stored credit card information in a simple process that bypasses any monetary exchange between drivers and users.
Although the RBI did not specifically address any company, it noted "it has come to our notice" cases in which domestic credit card transactions avoided the additional verification process by using an overseas payment system.
The RBI noted companies would have until Oct. 31 to ensure the two-step verification process was being followed, while noting that payments must be routed through a domestic bank and settled in Indian rupees.
"It is advised that entities adopting such practices leading to wilful non-adherence and violation of extant instructions should immediately put a stop to such arrangements," the RBI said in a circular.