New draft guidelines in India raise concerns among prepaid payment instruments; prepaid card transactions to reach US$68 billion by 2021

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The new set of draft guidelines for digital transactions made through prepaid payment instruments (PPIs) have raised concerns among wallet and payment firms over possibility of dual restrictions from the Reserve Bank of India (RBI) as well as the Government of India.

As per the new Security of Prepaid Payment Instruments Rules 2017, every wallet firm should appointment of a chief grievance officer and post a privacy policy comprising sourcing, storage and sharing of information on its website and mobile app. Furthermore, PPIs should also report any cyber-attacks to the Indian Computer Emergency Response Team (CERT-In), a nodal agency working under the Ministry of Electronics and Information Technology of Indian government. The new draft guidelines, which are currently out for public comments until 20 March 2017, are aimed at providing security for digital transactions and to address customer grievances.

With stringent regulations already in place, industry players in the country also find that multiple layers of authentication for payments could adversely affect their core business, particularly in rural areas where there is poor internet connectivity. Meanwhile, PPIs in the country opine that both the government and the RBI should co-ordinate and frame the final set of rules to prevent any overlap.

Digital transactions continue to grow in India after the demonetization move in November 2016 as more customers are moving towards online mode. This rise has also resulted in increase in cyber-crime, despite several measures. The new set of draft guidelines were part of the Government of India’s broader plan to move towards a cashless economy.

The prepaid card market is expected to record a CAGR of 37.3%, from 2017-2021, to reach US$ 68,264.2 million in terms of transaction value by 2021. During the review period, the transaction value increased from US$ 3,891.1 million in 2012 to US$ 13,625.1 million in 2016, posting CAGR of 36.8%. In 2016, the market registered a growth rate of 36.1%, and is expected to grow at 40.8% in 2017.

To know more and gain deeper understanding of prepaid card industry in India, click here.