India’s central bank puts up a puzzling obstacle to a payments system, again

Digital businesses are showing negative results by losing their Indian customers. From smartphone apps to websites, anyone with a regular, card-based payment arrangement with subscribers has run into a roadblock put up by central bank.

The RBI’s guidelines, which went into force this month, have disallowed recurring card payments without a one-time registration. For standing instructions on credit and debit cards above Rs 5,000 ($67), additional authentication will be required: Customers must validate every transaction each month, 24 hours before it takes place. After banks and card networks missed the October 1 deadline, payments began to fail for millions of people.

But while online payments boom, credit cards are far from superfluous. An independent software developer in India can rent space on Google Cloud because alphabet incl. is assured of recouping the expense it incurred in hosting an unknown code writer’s project on its servers. The credit risk is with the bank behind the card.  

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