The payment processing industry as it stands today is steadily eating into India’s economic growth by deciding what we do with our money and with whom

How would we as an independent nation, about to celebrate our 63rd Independence Day, react in the following hypothetical situations:

The Indian PM has to travel to Cuba, in the course of his international visits, and Boeing / Lockheed Martin take objection to the fact that he is planning to go there on a Boeing 747 aircraft. They then withdraw the operating licences for the global operation of the aircraft, suspend maintenance and arbitrarily also ask all other Boeing/Lockheed Martin support companies en route to not provide any form of service or assistance. The Indian representatives in India are suddenly not available for comment.

Information on MasterCard or Visa or American Express cards used by unidentified terrorists at ATMs and POS terminals in and around Gujarat which may or may not have been connected with the 26/11 Mumbai attacks is not provided to the government of India on grounds of "privacy", regardless of the simple fact that the jury is still out on whether the Indian Constitution really does offer privacy as a fundamental right. Further queries on the matter are simply ignored or worse, existing data on them is sought to be covered up, even though traces on Internet communications are found. The representatives in India are suddenly not available for comment.

Analysis of typical spend patterns of key people in India is undertaken by a variety of agencies abroad on a regular basis, and is done as permitted under US laws, without reference to or permissions being sought from the impacted people. Any objections are met by directing people to the miles of fine print in such agreements as may have been signed by these people in good faith, since they presumed they were covered by Indian regulations and laws, and in any case contacting the India branch offices of the relevant companies does not provide anything more than stonewalling. The representatives in India are suddenly not available for comment.

Thanks to an over-dependence on US government controlled GPS systems and navigational charts issued by the Royal Admiralty, some islands in the Indian Ocean have simply disappeared off the charts. Not due to rise in ocean levels or global warming, but by a simple click of a mouse. Furthermore, navigation by sea and air is banned in these areas for reasons not very well specified, including for emergencies. These territories fall in India's sphere of influence, and are impacted by a variety of treaties and conventions, none of which seem to bother those who would take the traditional and legal freedom of the seas and turn it upside down.

The list can go on. But this column is more about the way the payment processing industry as it stands today is steadily eating into India's economic growth, by trying to control the very root of the ideals that the champion of free trade stands for, by deciding what we do with our money and with whom. And yes, the representatives as well as those controlling things in India are suddenly not available for comment. Likewise, both RBI and SBI also do not respond, despite email messages and reminders.

The Payment and Settlement Systems Act of India, 2007, is, as far as we as sovereign and free Indians are concerned, the governing statute under which the plastic in our pocket performs. We like to think of these wonderful tools of our fiduciary existence as being extensions of other Indian government documents - after all, what can be more sacred to a country's independence than its own currency and economy? By definition, therefore, this plastic is an extension of everything we hold holy, sacred and vital, as well as everything our founding fathers fought for when we sought freedom from the multiple yokes of foreign rulers - including and of increasing importance in the recent years - our economic freedom.
 
You can read up about it here:
 
http://www.rbi.org.in/scripts/FAQView.aspx?Id=73
 
This Act makes things very clear for anybody wishing to set up a payment system in India and they have to do so only after getting permissions from the Reserve Bank of India (RBI) under the above Act (Section 4 & 5). It also lays down the provisions in case of calling for returns or information (Section 12 & 13). The standards are laid down by the RBI (Section 10). Directions are issued by the RBI (Sections 17 & 18) and obviously have to be in the national interest. The list goes on - and nowhere does this Act even imply that an applicant or system provider will adhere to anything but the laws of India when as a successful applicant he does business.
 
Then why does an SBI credit card not function in Iran lately? Because, it appears, that despite all the RBI instructions and the PPS Act of 2007, they are suddenly following US laws on sanctions against Iran.
 
Not content with trying to establish a monopoly on the Point of Sale (POS) business in India, their collaborators or partners in the business, Visa and MasterCard, ably supported by American Express, are now telling our banks what to do and with whom, abroad also. That's wonderful, isn't it?
 
This is also one of the reasons why electronic money or plastic money options have not really reached out to the masses, since entry barriers thanks to this sort of "co-operation" are still very strong and expensive, thereby leaving out the large number of small regional co-operative banks and other local institutions which would assist in seeing that many of the unbanked also reduced the current high transactional costs of operating under a localised and an-all cash or barter economy.

Thankfully, the ATM business moved into the control of the National Financial Switch, and we have immense growth in the country on this business and at much lower costs to customers than those provided a few years ago by the same MasterCard/Visa combo. Although here also, why India's banking regulators needed a foreign company called Euronet to do all the end management when there are enough resources in India who would do the same even better has never been suitably explained, though indications are that domestic collaborations or subsidiaries like the Institute for Development & Research in Banking Technology (IDRBT) or along the lines of CRIS are in the wings, waiting to take over.
 
Meanwhile, China's payment processing industry has moved rapidly to fill the space left behind in Iran and other countries, by this monopolising behaviour from Visa and MasterCard. What is India doing?
 
We await an answer from the RBI, and shall have more on the subject. — Veeresh Malik