The online payment market of India is fast growing. Foreign investors have started investing in this remunerative field and we are seeing lot of investment opportunities in this field. Of course, most of online payment service providers are not complying with Indian laws and their projects and ventures are vulnerable to legal actions.
Even foreign investors in online payment industry of India are not conducting cyber law due diligences (PDF) while investing in Indian e-commerce and technology ventures. These investors are also not checking whether legal issues of e-commerce in India have been duly complied with or not by those dealing in e-commerce related activities.
Even foreign players are trying to enter into this field. For instance, Apple plans to launch mobile payment service through Touch ID. In order to ensure that Apple remains on the legal side, recently Apple removed Bitcoin application Blockchain from its application store. This is because virtual currencies like Bitcoins are full of legal and security risks. Most of the Bitcoins exchanges are not complying with Indian laws and they are vulnerable to legal actions of various sorts.
Efforts are in the process to spread the reach of mobile banking in India. For instance, RBI is exploring use of encrypted SMS based fund transfers in India. However, the encryption laws in India are not clear as on date. Similarly, mobile payment legal compliances are still not followed in India. Cloud computing legal risks are looming large upon cloud service providers and if mobile payment service providers would use cloud based services; this would raise additional techno legal issues.
Now it has been reported that a technical committee appointed by the RBI has recommended standardisation and simplification of procedures for registration / authentication of customers for mobile banking services. It has also suggested adoption of a common application platform (with necessary level of security through encryption) across all banks and putting in place a cohesive awareness programme.
The committee has identified the challenges faced by the banks in providing mobile banking to customers in general (customer enrolment and technical issues) and further highlighted the challenges faced in providing SMS / unstructured supplementary service data (USSD) / application-based mobile banking and recommended solutions for the same.
Considering the fact that non-PKI enabled payment systems, such as clearing (MICR / non-MICR), electronic credit system, credit card and debit cards contributed 75 per cent in volume terms but only 6.3 per cent in value terms in the year 2012-13, the group has suggested that in order to ensure a safe, secure payment system in the country and to ensure legal compliance, digital technology, such as, PKI may be used.
The report also highlights, among other things, security features in existing payment system applications and feasibility in implementing PKI in all payments system applications. The group has also recommended that banks may carry out in phases PKI implementation for authentication and transaction verification.
Perry4Law welcomes this move of RBI and at the same time would like to stress that these initiatives of RBI would not be fruitful till a techno legal compliance framework is prescribed by RBI and is actually implemented all across India.
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