Online payment has become an easy and convenient method to pay bills and other charges from the ease of an individual’s home. Many entrepreneurs in India have started exploring online bills payment and online expenses reimbursement e-commerce models in India. This is a clear indication that online payment market of India is going to flourish in the near future.
However, while starting an online payment portal or e-commerce website in India, the entrepreneurs must also keep in mind the requirements of Internet intermediary liability in India and cyber law due diligence in India (PDF). There are many legal issues of e-commerce in India that various online payment service providers of India must comply with. Perry4Law has already specified the cyber law due diligence requirements for Paypal and online payment transferors in India.
The integration of online payment with virtual currency is another challenge that has to be addressed by online payment service providers of India as it involves many legal risks. The Bitcoins exchanges operating in Indian are not complying with the legal requirements and this is attracting the attention of Indian law enforcement agencies. The Enforcement Directorate (ED) has already searched few Bitcoin websites in India as it believes that Bitcoins money can be used for hawala transactions and funding terror operations. Indian corporates have started lobbying for regulating digital currencies like Bitcoins in India.
The Indian banking regulatory environment in India is fast changing though much still has to be done in this regard. The banking, financial and regulatory environment in India is becoming very conducive for online payment market of India. A Code of Bank’s Commitment to Customers by Banking Codes and Standards Board of India (BCSBI) has also been prescribed to empower banking customers. The Securities and Exchange Board of India (SEBI) would also release corporate governance rules for the Listed Entities in India.
Companies like PayPal have already realised the potential of online payment markets of China and India. PayPal is planning to make its presence in India and China more prominent. Another reason why companies like PayPal are entering into Indian market is the strong growth of e-commerce in India. With the growth of e-commerce and e-governance in India, online payment market would also grow. For instance, electronic delivery of services in India would also result in a parallel growth of online payment platforms in India.
In fact, an electronic delivery of services bill of India 2011 has already been adopted by Indian government and it may become an applicable law very soon when the parliament of India clears the same. Add to this the initiatives of mobile governance in India. Very soon we may have an implementable m-governance policy of India. Also an integrated modern banking law for India is in pipeline that may strengthen online payments making in India.
While things are happening in the right direction yet there are some shortcomings as well. For instance, a majority of e-commerce payments are still made in an offline manner. The cash on delivery may harm e-commerce in India in the long run. A shift toward online payments is not only desirable but is also inevitable.
Similarly, e-commerce players, online payment companies and websites in India are still not aware of the key provisions of cyber law of India. E-commerce players and online payment management companies are still not aware about the Information Technology (Intermediaries Guidelines) Rules 2011 (PDF) of India.
Similarly, both e-commerce platforms and online payment companies are required to ensure cyber law due diligence in India. The cyber law due diligence for Indian companies is very stringent and there is no reason to take it lightly. In fact, cyber due diligence for foreign and Indian websites in India is an issue that is frequently agitated before Indian courts. Further, legal requirements of undertaking e-commerce in India must also be strictly followed.
While the opportunities for e-commerce and online payment companies are great yet the corresponding obligations are also equally troublesome. If e-commerce and online payment companies wish to make good profits they have to ensure sound compliance with Indian laws, especially the cyber law of India.