How should RBI regulate the payment and settlement service providers like MasterCard, Visa and Western Union?

All payment and settlement service providers such as Mastercard, Visa, and First Data including various service providers of back-end support to banks for internet payments, credit card settlements and ATM transactions must be registered with the Central Bank apart from these service providers registered as companies and their activities can be directly controlled by RBI. Now, The regulated entities should also include the Clearing Corporation of India (CCIL) and remittance companies such as Western Union Money Transfer.

RBI must place an approved Act of regulations for the payment and settlement Systems  in the country which should defines a payment system and gives legal recognition to multilateral netting and settlement finality. The regulators will help in growing the payment system and enables faster deployment as it is directly related to economic growth. The Act should be placed on website for public scrutiny and RBI should accept comments and suggestions for the same.

In my view, at present, there is little regulation to tackle bouncing of electronic payments, as there is for bouncing of cheques. CCIL, the large-value electronic payments solution provider which facilitates inter-bank overnight borrowing and collateralised borrowing transactions, and National Payment Corporation of India  (NPCI), should also be brought under the regulations’ ambit.