How legally credit cards, debit cards, ATMs, PhonePe, PayTm wallets etc. works

The Reserve Bank of India (RBI) enacted the Payments and Settlement Act of 2007 (PSS Act, 2007), which was approved by the President on 20 December 2007. The law entered into force on 12 August 2008. Payments and Settlement Regulation is a central authority established by the Reserve Bank of India (India’s top bank) with the ability to control and monitor Payments and Decision Making (BPSS). The Reserve Bank of India also issued the Payments and Payments Act 2008. Both Laws entered into force on August 12, 2008.



Purpose The Payments and Payments Act 2007 regulates and monitors the payment system throughout India.

The Act gives the Reserve Bank of India maximum authority to strengthen and regulate payment gateways. It also provides a legal framework for “clarification” and “final resolution”. The Reserve Bank of India has formed a committee of economic experts in the management and supervision of payments and payments under the central authority to manage and monitor the payment and settlement (BPSS). The Reserve Bank of India also issued the Payments and Payments Act 2008. Both Laws came into force on 12 August 2008.

The purposes of the Payment and Settlement Systems Regulation of 2008 are as follows:

• It includes the issues related to the format of the payment and authorization start/process authorization application.

• Creating the payment structure and issuing payment instructions.

• Includes topics related to returns, documentation, or other information.

• It also considers how service providers create financial statements and balance sheets.


Payment authorization Section 4 of the PSS Code

Authorizes the RBI only to operate or initiate a payment scheme and any person wishing to do so must apply to the RBI for authorization under Section 5 of the Code. For this reason.

The permit application must be registered using Form A, pursuant to rule 3(2) of the 2008 PSS Act. The application must be completed and submitted to the RBI along with the required documents and cost of $10,000. The application fee can be paid in cash, bearer check, demand check, wire transfer, check to the Reserve Bank of India or wire transfer. Electronic transmission is also possible. RBI must issue licenses via this link to service providers that operate or wish to install such payment systems.

According to the law, illegal use of payment will be illegal and will be punished.


Management and Authority of Foreigners

The law does not make any distinction or distinction between national and international organizations. According to Article 4 of the Law, he does not use the word “no one”. Hence, foreign organizations can do paid work in India. An institution, whether domestic or foreign, must obtain a license or approval from the RBI before it can start making payments in India.

According to the law, foreign companies can offer services or payment options. The PSS Act 2007 has no restrictions on the type of payment a foreign company can provide as long as the payment method or service complies with the laws of that country. RBI, MasterCard, Visa WorldWide Pvt. Authorized foreign credit cards such as Ltd. Companies such as are currently running the credit card industry in India.

Western Union Financial Services, MoneyGram Payment Systems, Inc. etc. Foreign service providers that also provide remittance services, such as remittance, are also authorized. For more information, please visit


Financial Management Infrastructure (FMI)

Operator of a multi-organizational organization.

This technology is used to cancel, correct or record payments, securities or other financial transactions. FMI defines Central Depositories (CSDs), Securities Settlement Systems (SSS), Central Counterparties (CCPs) and Transaction Warehouses (TRs) “payment systems” under the Law in order to facilitate clearing and reconciliation of financial transactions and savings. Names it. The Payments and Payments Committee (CPSS) and the International Securities Exchange Commission (IOSC) have published the Financial Markets Principles (PFMI). PFMI policies and procedures also apply to FPA. Foreign financial institutions can operate in India.

The PSS Act does not limit its activities. On July 26, 2013, the Reserve Bank of India issued a press release titled “Privacy Policy on Financial Infrastructures”.


RBI’s regulatory powers

RBI has the following powers over a payment sanction application: Pursuant to Section 7 (3) of the Law, the RBI may reject the application by sending a notice to the applicant.

Give reasons and allow sufficient time to respond. All privileges granted by RBI under Article 8 of the Law will be revoked. The authorization may be revoked if the Service Provider violates any policy or instruction of RBI, violates any applicable law or regulation, or violates the terms and conditions governed by law.

Pursuant to Section 7, RBI is entitled to charge a license fee. Pursuant to Section 15(3), RBI deems it necessary to disclose information or information received by it to any person or entity in order to best protect its integrity, right of use or security of payment. Working for the benefit of the bank or financial policy or the public interest. RBI has the power to ensure that Section 14 of the Law complies with the provisions of the Law. Regulations established by law have the power to appoint an officer to enter any place where payment is made, inspect equipment, communicate with any employee or participants of the service provider, and request information or data.


RBI also reserves the right to audit when required.

According to Articles 17 and 18 of the Law, the RBI has the power to arrange payments or for any participant to undertake or refuse to take any action to ensure the smooth functioning of the payments.


Retail Payment Organization

i. National Financial Center (NFS)

ii. Instant Payment Service (IMPS)

iii. Participation of RuPay Cards (Debit/Prepaid Cards) issued by Banks and cooperative cards issued by Non-Banking Financial Companies (NBFCs) or other approved institutions of Reserve Bank of India.

iv. National Automated Clearing House (NACH)

v. Aadhar Payment System (AEPS)

vi. Operation of Check Cutting System

vii. Unified payment interface

viii. National Electronic UFRONED system (NETC)

To resolve the disputes of the participants, actuator groups should be formed and submit disputes with two or more members from that group. The Central Bank will be consulted if the participants are not satisfied with the committee’s decision or if there is a disagreement between the participants and the service provider. If the matter is conveyed to the Central Bank, then the authorized Central Bank official will take the final and binding decision. In the event of a dispute between the Reserve Bank as a Service Provider or a Participant and another Service Provider or Participant, the matter will be referred to the Central Government, which allows a security not lower than the level of the Secretary to the Secretary. . It will be done by the Central Government. This is the last.


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