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Cybersecurity norms for payment services

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NPCI

Mains level : Paper 3- Cybersecurity norms for payment systems

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.
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