With digital wallets taking the country by storm, Indian banks have raised the issue of regulatory arbitrage enjoyed by them, with the Indian Banks Association. ET Telecom reports that the main reason for this is the fact that payments made by bank cards are subject to two-factor authentication, while wallets make seamless payments without customers having to enter a PIN/password.
However, Vijay Shekhar Sharma, CEO, Paytm, said the charges do not apply to his company. He said:
We are already enforcing two-factor authentication when a customer uses a merchant for the first time. Also, we have deployed analytics so that the additional authentication through one-time password is triggered if there is any unusual use of the card.”
Paytm added that wallet holders will be converted into bank account holders once the payments bank is set up in 2016.