“Banking activity” of international players without a banking license?

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By Thomas Franco *
Today, Google-owned Google Pay (G-Pay), Walmart-owned PhonePe, Soft Bank-owned PayTm and other payment apps resumed money transfers. According to the report of the National Payment Corporation of India, as of September 2021, there were 3.6 billion (3,654.5 million) Unified Payments Interface (UPI) transactions worth Rs 654,531 crore.
This was made possible by the National Payments Corporation of India (NPCI) which provides access to the accounts of all banks using the UPI platform as the accounts are linked to the Aadhaar card and the customer’s phone number.
These links mainly benefit international players, because they allow them to carry out banking activities without a banking license! GPay does not charge anything for transactions. Why? Because they search for data more than anything else. At a later stage, they will start charging usage fees to the sender as well as the recipient. Apple Pay has already done this in the United States.
There are over 58 apps using the UPI platform. Banks have lost money transfer business because of these apps. SBI, the largest bank, has only 1,036.45 million remittances and its app has only 3.77 million transactions. Due to service charges, customers no longer prefer banks. It’s a way to kill banks to help FinTechs.
But that’s just the tip of the iceberg. There is no way to get your money back if you deposit into the wrong account using these apps. The transaction is not traceable, whereas in wire transfer there is a way to trace and recover your money.

Additionally, in apps, the app owner has access to your data, invading your privacy. Businesses use your financial behavior to study what you buy, who you pay for, and use it to advertise products and influence your buying decisions.
Aside from the intrusion into his privacy, doesn’t that create security concerns? Let’s look at this aspect. Google has the map of the entire country, including the locations of defense installations. You must have seen in movies and TV series how the CIA and FBI get precise locations using satellites and even plan operations using drones. It could be worse in real life.

Anyone can be easily put under surveillance thanks to their Aadhar card, their phone and their GPS. People don’t realize it. The government knows it but does not care. The NPCI is planning some checks after 2021. Why didn’t they do this before allowing apps to access data through UPI?
Google says it plans to provide confidential data protection. The question is, to what extent? What is the RBI doing? What is S Gurumurthy of Swadeshi Jagran March doing at RBI doing about these videshi companies? Google is an investor in Reliance Jio. Reliance also has a payment bank which does virtually nothing compared to the Airtel and Paytm payment bank. They are probably waiting.
The youth of the country is taken for a ride. FinTech companies will use this data and give them huge interest loans and lead them into a debt trap. Banks will continue to lose business, including loans, as these apps will soon start lending. But who cares ?

* Thomas Franco is the former Secretary General of the All India Bank Officers’ Confederation (AIBOC). Source: Financial Responsibility Center


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