In an attempt to check incidence of financial frauds and fortify the financial ecosystem, the Reserve Bank of India is expected to come out with guidelines for issuing licenses to operate in the point of sales (POS) business, said media reports. Following this, third-party POS operators would have to obtain licenses to function in the space and this is expected to impact players such as Pine Labs, MSwipe, Paytm and BharatPe to name a few.
According to media reports, the finance ministry has made a case for an enhanced KYC procedure and extensive due diligence by banks and financial institutions for onboarding merchants to safeguard customers against cyber risks. The sources quoted by certain media platforms said that there is a need to strengthen data security and data protection at the level of merchants and BCs as chances of compromise are higher at that level.
RBI may advice banks and financial institutions to review the concentration of BCs in cyber fraud hotspots and their onboarding, blocking of micro ATMs found to be involved in frauds, sources told PTI. This, the sources added, was one of the suggestions made at an inter-ministerial meeting held recently with the objective of furthering cyber security and checking financial fraud.
During 2023, as many as 11,28,265 cases of financial cyber fraud worth Rs 7,488.63 crore were reported, as per the data compiled by National Crime Records Bureau (NCRB).
Per the reports, the objective of introducing a licensing framework is to ensure harmony in operations and establish a level playing field between online and offline payment operators.
Third-party offline payments operators are estimated to be maintaining daily average balances of Rs 400 crore vis-à-vis Rs 1,000 crore seen in the online space and it would be in the interest of all the stakeholders to bring about the regulatory changes before the offline market becomes too big.