You can see the rules and regulations in other jurisdictions.
Payment services, covering clearing, payment and settlement activities, in India are held under the purview of the RBI and the Payment and Settlement Systems Act. Fintech businesses seeking to provide services involving prepaid payment instruments, ATM networks, money transfers or card networks must gain authorisation from the PSSA and comply with its operational rules. With that being noted, a large portion of fintech development within the payments industry is taking place on the technological side which falls outside of direct regulatory control from the PSSA.1
The National Payments Corporation of India (NPCI) has prescribed regulatory and technical guidelines for its products, like Unified Payments Interface (UPI) and RuPay. UPI enables to amalgamate multiple bank accounts into a single mobile application, bringing together various banking facilities. Plus, it can be combined with third-party applications such as Google Pay and WhatsApp Pay for digital transactions. But worries have been raised on the likelihood of misuse of data attained through UPI-based systems, so representations have been submitted to the Supreme Court of India seeking instructions from the top court regarding use of this data in accordance with relevant privacy and data protection measures.1
To address the concentration risk arising from NPCI's dominating presence in the burgeoning digital payments space, the RBI has introduced a framework to authorise a 'new umbrella entity' (NUE) which will primarily focus on introducing new payment systems, technologies and processes- mainly in the retail space- as an alternative to NPCI. Although some stakeholders have applied for licences, their outcome is yet to be released by the RBI. Nonetheless, this move has met with criticism from several Indian and global unions and associations who have raised issues like competition risk, potential privatisation of data-processing infrastructures, possible abuse of customer data and other drawbacks of giving licences to large multinational corporations and giants.1
As a recognition of the crucial role intermediaries play in online payments (particularly in handling funds in the transaction flow), the RBI has amended its guidelines to regulate the activities of 'payment aggregators' in India, intermediaries that facilitate merchants to accept various payment instruments from their customers. Tokenisation of card data has been introduced as part of these changes, which include restrictions on card data storage.1
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