provider, a monopolistic digital transaction industry would be alikely outcome if a level playing field is not created.A digital-payment platform set up by the service provider should beopen to other account holders within a specific agreed time period,and new entrants should be allowed to use existing paymentinfrastructures. Just as landline users can choose between differentlong distance providers, so too must regulation ensure that variousfinancial service providers can access the user.
Large and small:
The digital transaction eco system should involve,and not keep out, small firms.Large firms should not derive undue advantage from regulatoryprescriptions. This is important for many reasons. Take for exampleMicro-finance initiatives and how they can leverage the intra-communities ties for lowering cost of credit. Whether we have MFIsor bank correspondents, or private money-lenders, or NGOs, orother entities operating in small distinct communities, such entitiesneed not be debarred from providing their services to their usersthrough digital means. Though certain prudential norms would be essential, they should notfollow a one size fits all approach and, depending upon scale andscope of their operations, their regulatory requirements also need tobe appropriately structured.
2.Ensure low cost access for the masses that is integratedwith the economy.
Know Your Customer Norms:
If digital transactions are to be trulytransformational, it is important to bring unbanked customers intothe fold of payment systems. KYC regulations put in to ensurefinancial integrity can hamper the growth of this market and henceaffect the aim of financial inclusion.According to RBI guidelines, mobile payment services to be offeredby banks are not only restricted only to their customers, but also tothose customers who are KYC/AML compliant. Since subscription to amobile phone also involves identity checks, this is a duplication of effort and can given rise to inconsistencies in norms. Standardizingthe system of compliance across digital and financial worlds will alsohelp sharing of data and information. These may seem as smallglitches now, but can appear as roadblocks later on retarding thegoal of integrating the latest digital technology with financialservices. Discussion on evolving systems is important to keepabreast of technological and market developments.