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The Reserve Bank of India fines Visa ₹24.1 million for using an unauthorized payment transfer method, emphasizing tighter fintech regulations.
Key Points
- RBI fines Visa ₹24.1 million for using an unauthorized payment method.
- Visa implemented a payment authentication solution without RBI approval.
- The RBI ordered Visa to cease using the unauthorized method in February.
- Visa commits to adhering to RBI guidelines and regulations.
- RBI intensifies scrutiny on fintech companies’ processes.
The Reserve Bank of India (RBI) has imposed a penalty of ₹24.1 million (approximately $288,000) on Visa for utilizing an unauthorized payment transfer method. The central bank announced this decision on Friday, highlighting that Visa had implemented a payment authentication solution without obtaining the necessary regulatory clearance from the RBI.
In a statement, the RBI noted, “It was observed that the entity (Visa) had implemented a payment authentication solution without regulatory clearance from RBI,” though specific details of the transgression were not disclosed.
A spokesperson for Visa responded to the penalty, stating, “We duly acknowledge the RBI order and remain committed to following RBI guidelines and regulations to continue providing safe and secure payment solutions in India.”
This action follows a February directive from the RBI, which required the credit card company to discontinue the use of an unauthorized route for some commercial payments, according to a report by Reuters.
The RBI’s penalty on Visa underscores the central bank’s commitment to tightening scrutiny over the processes employed by financial technology, or fintech, companies. As fintech continues to evolve, the RBI aims to ensure that all payment solutions adhere to strict regulatory standards, thereby safeguarding the integrity and security of financial transactions in India.
Visa’s acknowledgment of the penalty and its commitment to compliance reflect the ongoing adjustments that financial institutions must make in response to evolving regulatory landscapes. The RBI’s increased vigilance serves as a reminder to all fintech entities operating in India of the importance of obtaining proper authorization and maintaining transparent operations.
