Track fishy
transactions, RBI tells payment firms
The Reserve
Bank of India has directed all regulated payment companies to track high-value
or suspicious transactions during the course of general elections, according to
multiple senior executives in the know.
In a letter
dated April 15, the RBI asked payment system operators (PSOs) to prevent any
potential misuse of electronic fund transfer mechanisms to influence voters or
indirectly fund poll candidates.
ET has seen a copy of the letter.
The
regulator wants payment companies to track high-value merchant payments
specifically. Also recurring person-to-person payments can be brought under
scrutiny, one of the executives cited above said.
Fintech
companies like Razorpay, Cashfree, CCAvenue and Mswipe are all regulated
payment aggregators while others such as PhonePe and MobiKwik are mobile wallet
licence holders.
The central
bank has cited concerns raised by the Election Commission of India, the apex
body conducting the elections, in its directive.
It also
asked payment companies to track dubious transactions and report them to the
relevant authorities.
Cash
monitoring
Historically,
cash in circulation has gone up during elections. And, the RBI has typically
instructed banks to monitor movement of cash.
However,
industry insiders said this is one of the first instances where the regulator
has called out payment companies and asked them to track digital payment
movement.
Merchants
can be used as a conduit for unauthorised fund transfer, someone can make a large
value payment to a merchant and that person can pay out through smaller cash
amounts to multiple people in the locality mainly aimed at influencing voters,
said another top executive at a payment firm on the condition of anonymity.
Using a
point of sale (PoS) terminal to convert money from digital to cash is a very
common mode of money laundering, the person added.
For
instance if a retailer suddenly processes a Rs 1lakh transaction, where average
ticket size of a transaction typically is around Rs 2,000, that is a red flag,
said another top executive at a payment firm who has also received the letter.
He further
said that small-value P2P payments also need to be monitored.
I have
informed my risk team to flag if a specific small-value recurring payment is
being made in a particular region around the time of elections, it could be a
means to influence voters in a specific area, the executive added.
As payment
firms are brought directly under the supervision of the RBI, there is a higher
degree of responsibility that is expected from them.
Additionally,
with issues around limited know-your-customer (KYC) of the merchants done by
payment startups, the regulator is further concerned about the kind of
businesses which have access to formal payment channels. In a notification
issued last week, the RBI has suggested that payment companies be also mandated
to undertake bank grade KYC of their customers before they onboard them for
these services.
www.economictimes.indiatimes.com
dt. 22.04.2024