Perverse regulations

So Uber has tied up with PayTM to process its payments without a second factor of authentication in order to comply with RBI regulations. This is a major win-win for both companies. Uber can now gain access to the part of the relatively affluent Indian population that does not own a credit card (this is a significant segment). PayTM now has a compelling reason to sign up users for its Wallet solution, since all Uber customers now form a sort of a captive audience for this solution.

While discussing this on twitter, someone suggested that once the new Payment Bank regulation is brought in by RBI, wallet solution providers such as PayTM can then set themselves up as Payment Banks.

The problem with that is that if PayTM becomes a payment bank then it will have to comply with RBI regulations of second factor authentication and thus Uber users will not be able to use their PayTM wallets (now accounts) for seamless payment!

#Thatzwhy we need strong regulations.

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