We missed that earlier: It turns out that Netflix has started accepting UPI Autopay. The enterprise announced the function on August 30th. Netflix currently accepts autopay through BHIM and Paytm. So if you want to pay through UPI, you can only do so through these two apps. Netflix has only accepted two payment methods since its inception in India: debit or credit cards and postpaid bills from telecommunications providers or ISPs. UPI Autopay is a payment system announced last year from the National Payments Corporation of India, which emulates the effect of recurring card payments with UPI.
However, this new option came without much ado. And that’s understandable – the company was likely forced by Reserve Bank of India regulations to wean its reliance on people paying with a credit card. The regulations are part of an undercurrent of government activity pushing customers towards indigenous ecosystems after decades of in-country digital transactions powered by international card networks. Here’s why.
What did the RBI do?
Netflix could see a significant drop in subscribers in India by the end of the year, even with its new payment option. The RBI has announced two new requirements for 2019 and 2020:
The long and short of these rules is that banks must issue notifications to customers before and after a customer is billed for a recurring transaction of 5,000 rupees.
Although these regulations won’t go fully into effect until September 30th, and the minimum amount up to which they will apply is higher than the price of most consumer-facing digital services, they have already sent some shock waves through the industry: Google has stopped offering recurring payments in the Play Store and switched to a prepaid-only model for YouTube Premium in India. Even YouTubers around the world who have a paid subscription offer on their channel cannot currently receive auto-debited subscription money from Indian customers. As a result, payments for services like Netflix failed for some banks’ cardholders before the RBI deadline, which hurt the company’s India revenues and annoyed customers.
Banks are also shaken as they have to revise their systems to meet the requirements. Axis and ICICI Bank simply rent out Everyone Recurring transactions fail, forcing their customers to re-validate all of their subscriptions on the merchants’ websites. If the rules are fully in place, banks may well choose to move even transactions under Rs 5,000 to the same type of consent dashboard as large transactions. There is a precedent for this; While transactions up to 2,000 rupees were exempt from two-factor authentication for online transactions, few banks have dared to bypass the requirement even for smaller transactions.
Deduct Indians from (foreign) cards
The government and regulators have done a lot to undermine the perceived dominance of foreign payment providers, perhaps more so than most countries (like China). The Unified Payments Interface as a bank-neutral, portable payment network – an idea that usually confuses banks and established payment transaction companies – was established in the last five years and quickly marketed. RuPay was also established as a domestic alternative to established card networks.
The government offers merchants incentives (waivers of transaction fees) and private companies incentives customers (cashbacks on transactions). But where there’s a carrot, there’s a whip. The Reserve Bank of India has used its payments oversight powers to tip the playing field in favor of local solutions, even if it requires TNT’s political equivalent.
The rules for recurring payments aren’t alone. There is also data localization assignment, which requires card networks operating in India to store data on the transactions of Indians only in India. This surprised the two largest global payment network operators Visa and Mastercard; A Mastercard executive said in an interview that no country has required the company to take its citizens’ data from data centers in. to delete miscellaneous Countries, although some may have requested that a copy of this data be available in the country itself.
And RBI did not hesitate to use the proverbial stick: Dissatisfied with Mastercard’s compliance, it forbade banks to issue cards in the company’s network for the foreseeable future.
The message to banks and customers couldn’t be clearer: digital payments in India should rely on indigenous technologies with localized data that networks like UPI and RuPay benefit from, possibly at the expense of international operators like Visa and Mastercard.
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