The Reserve Bank of India (RBI) has imposed monetary penalties on three payment system operators (POS) including Visa for non-compliance with directions.
Fines were imposed on two Payment System Operators (PSOs)—Manappuram Finance Limited and Ola Financial Services Pvt. Ltd.—for failing to comply with the Master Direction – Know Your Customer (KYC) Direction, 2016, dated February 25, 2016.
Additionally, Compounding Orders were issued to Ola Financial Services Pvt. Ltd. and Visa Worldwide Pte. Limited for violating provisions of the Master Directions on Prepaid Payment Instruments (PPIs) dated August 27, 2021, and Card Not Present transactions, specifically regarding relaxation in the Additional Factor of Authentication for payments up to ₹2000, dated December 06, 2016.
Visa was fined INR 240.1 million ($287,000), Manappuram Finance was penalised INR 4.15 million ($49,568) while Ola Financial Services was fined INR 3.34 million ($39,893) and INR 5.42 million ($64,737) for two different non-compliances.
Manappuram Finance and Ola Financial Services were found non-compliant with RBI’s KYC requirements. They were issued notices to explain why penalties should not be imposed. After reviewing their written responses and oral submissions during personal hearings, RBI concluded that the charges of non-compliance were valid and warranted penalties.
Ola Financial Services also reported a shortfall in its escrow account balance and applied for compounding of the violation. After reviewing the application and oral submissions, RBI decided that the contravention could be compounded.
In the case of Visa, the entity implemented a payment authentication solution without prior regulatory approval from RBI. A notice was issued to Visa to explain why a penalty should not be imposed. Visa subsequently applied for compounding of the violation, and after examining the application and oral submissions, RBI determined that this contravention could also be compounded.