Taking a cue from the Finance Minister’s budget speech and Ratan Watal committee recommendation, Internet and Mobile Association of India (IAMAI) suggests formation of a law on payment neutrality in India.
As net neutrality is critical for Indian internet companies to flourish, payment neutrality is essential for the germination of indigenous fintech companies. India currently has more than 500 companies and start-ups in the Fintech space. IAMAI along with Payments Council of India (PCI) represents the largest number of fintech companies under its membership.
Payment neutrality is based on two principles;(a) equal access to payment infrastructure for equal services and (b) no inter blocking of services. It refers to smooth interpretability between different digital payment instruments being offered by innovative fintech companies.
There have been recent cases of one of the major PSU banks blocking loading of money onto one of the most popular prepaid wallet to promote its own product. We have also seen one of the biggest private sector banks blocking UPI based transactions to another UPI application powered by a different banking entity. All this would not have arisen if the law on payment neutrality would have been in place.
The Watal Committee Report clearly identifies such cases of dominance of incumbents and calls for certain changes that need to be addressed. For instance, non-bank wallets do not have access to UPIs which are solely hegemonised by banks. The committee report also stresses conflict of interest that may arise from NPCI that plays a pivotal role in the digital ecosystem, given that top 10 banks own 74% share in it.
IAMAI urges that the overarching principle for payment neutrality in the form of a law should be adopted for all future reforms announced for promoting digital payments.
