RBI Identifies Unauthorized BPSP Operations in One Card Network

Current Context: On February 15, 2024, the Reserve Bank of India (RBI) stated unauthorized Business Payment Solution Provider (BPSP) operations by one unnamed card network.

• Key points:
• Unapproved arrangement: The RBI identified an arrangement facilitated by a card network that allowed businesses to use intermediaries to make card payments to entities that don't accept card payments directly.
• Concerns: This arrangement raised concerns about bypassing card acceptance protocols and potentially violating the Payment and Settlement Systems Act (PSS Act).
• Only one network: While the RBI didn't name the specific network, they clarified that only one card network had implemented this arrangement in India so far.
• Action taken: The RBI directed the unnamed network to stop this unauthorized practice and keep all such arrangements on hold until further investigation.

Question:

Q.1 What action did the RBI take against the unnamed card network?
a. Imposed a fine
b. Directed the network to stop the unauthorized practice
c. Took no action
d. Encouraged the practice