What prompted RBI to take such step
- Following a series of data breaches faced by operators including Mobikwik and payment aggregator JusPay, the Reserve Bank of India (RBI) will soon issue cybersecurity norms for payment service providers (PSPs).
- On cyber frauds, Reserve Bank of India has issued very recently basic guidelines on cyber hygiene and cybersecurity for banks and certain NBFCs,
- The standards for fintech-driven payment services providers will be similar to these cyber hygiene norms issued recently.
- the critical challenge for regulators would be to speed up the absorption of fintech without undermining the financial system’s integrity or stability.
UPI dominated by limited players
- There are not too many payment systems in India and the number of players is limited.
- Two apps provide about 70% of third-party services in the UPI system.
- The concentration of two or three third-party providers in this retail payments space could give rise to competitive weaknesses.
- Therefore, the National Payments Corporation of India (NPCI) had laid down a framework for a more even distribution of share of third-party app providers in the UPI system.
