The Payment Regulator Discussions
Date: 23rd Jan 2017 By: Amit Bhushan
It is interesting on how media would take the pressure off government and get into discussions which may not have a head or tail. Take the example of payments going cash-less wherein there is a public support to drive incentive changes amongst the business and institutional sector to go cash-less. This would drive up government revenues since businesses and social sector would have to become more compliant.
http://www.managementparadise.com/article/9151/demand-for-cash-less-and-the-discussion-without-byora
http://www.managementparadise.com/article/9126/the-arguments-against-the-lowest-hanging-fruits
http://www.managementparadise.com/article/9122/the-cash-less-incentives
Instead of putting focus on these demands, the commercial news media would take on almost all other kind of arguments (meaning all kinds of filibusters) from political funding to new regulators.
Let’s examine the argument for a Payments regulator. As a service, we have now variety of institutions providing payments services viz. banks, clearing houses, new fintech and global providers. Currently, almost all of these are currently regulated by the Central Bank. With the rise of technology, the regulations need to keep pace along with bolstering of the regulatory oversight capabilities, so that these can cope up with the ever rising complexity of new players as well as technological complexities and challenges. While this requires specialization and skills, however can this be stretched to argue in favour of a new regulator. We still have payment as a service being mostly subsidized through deposits, which are kept with the banks. As a service, payments are largely free for initiator although in certain cases such as cards, the recipient may be charges a fee or may have to maintain some subsidized deposits, so that service providers can recover their costs/profits.
With push for cash-less under demonetization, the government seems constrained to support small businesses, who have been reluctant to support digital transactions via cards/wallets on account of Merchant Service Charges (on recipient). They want to pass on these to the payers who are reluctant to bear it. The businesses may also have other constraint regards tax compliance or associated legal hurdles but these are not visible or apparent to buyers as the constraints related to Merchant Service Charges levied by the banks. To overcome the hurdle, what may be required is a complete waiver (or government subsidies) for all digital payment transactions below INR 2000/-, so that at least the visible constraints amongst the daily Kiryana sector or say Ration shops, is taken away. This would have huge potential to expand payments via cash-less and banking channels. Off course a lot of other measures would require to be undertaken as mentioned in some of the previous articles.
(http://www.managementparadise.com/article/9096/the-new-curbs-on-old-notes)
However, the commercial news media would discuss things such as regulator, which often without any questions for how would regulator have some tooth. This is because there seems no sense on how the subsidies required would be continuously available. It also doesn’t discuss the stability and oversight needs of the deposit and credit or banking system when there are two different regulators. Clearly there are signs of several filibusters being put forth for public consumption while the leader-class not very comfortable about bringing transactions to banking channels. Such pulls and pressures are a hallmark of democracy while no thought is spared that neither Shanichar or China (or third country) can bring any harm to the poor, who is more concerned about the ‘Game’ that is played within. Let’s see the ‘Game’ evolve further.....
Date: 23rd Jan 2017 By: Amit Bhushan
It is interesting on how media would take the pressure off government and get into discussions which may not have a head or tail. Take the example of payments going cash-less wherein there is a public support to drive incentive changes amongst the business and institutional sector to go cash-less. This would drive up government revenues since businesses and social sector would have to become more compliant.
http://www.managementparadise.com/article/9151/demand-for-cash-less-and-the-discussion-without-byora
http://www.managementparadise.com/article/9126/the-arguments-against-the-lowest-hanging-fruits
http://www.managementparadise.com/article/9122/the-cash-less-incentives
Instead of putting focus on these demands, the commercial news media would take on almost all other kind of arguments (meaning all kinds of filibusters) from political funding to new regulators.
Let’s examine the argument for a Payments regulator. As a service, we have now variety of institutions providing payments services viz. banks, clearing houses, new fintech and global providers. Currently, almost all of these are currently regulated by the Central Bank. With the rise of technology, the regulations need to keep pace along with bolstering of the regulatory oversight capabilities, so that these can cope up with the ever rising complexity of new players as well as technological complexities and challenges. While this requires specialization and skills, however can this be stretched to argue in favour of a new regulator. We still have payment as a service being mostly subsidized through deposits, which are kept with the banks. As a service, payments are largely free for initiator although in certain cases such as cards, the recipient may be charges a fee or may have to maintain some subsidized deposits, so that service providers can recover their costs/profits.
With push for cash-less under demonetization, the government seems constrained to support small businesses, who have been reluctant to support digital transactions via cards/wallets on account of Merchant Service Charges (on recipient). They want to pass on these to the payers who are reluctant to bear it. The businesses may also have other constraint regards tax compliance or associated legal hurdles but these are not visible or apparent to buyers as the constraints related to Merchant Service Charges levied by the banks. To overcome the hurdle, what may be required is a complete waiver (or government subsidies) for all digital payment transactions below INR 2000/-, so that at least the visible constraints amongst the daily Kiryana sector or say Ration shops, is taken away. This would have huge potential to expand payments via cash-less and banking channels. Off course a lot of other measures would require to be undertaken as mentioned in some of the previous articles.
(http://www.managementparadise.com/article/9096/the-new-curbs-on-old-notes)
However, the commercial news media would discuss things such as regulator, which often without any questions for how would regulator have some tooth. This is because there seems no sense on how the subsidies required would be continuously available. It also doesn’t discuss the stability and oversight needs of the deposit and credit or banking system when there are two different regulators. Clearly there are signs of several filibusters being put forth for public consumption while the leader-class not very comfortable about bringing transactions to banking channels. Such pulls and pressures are a hallmark of democracy while no thought is spared that neither Shanichar or China (or third country) can bring any harm to the poor, who is more concerned about the ‘Game’ that is played within. Let’s see the ‘Game’ evolve further.....