Paytm’s plans to launch a service allowing Indians travelling abroad to pay for their Uber rides through its mobile wallet has hit regulatory hurdles. The company had initially planned to roll out the service this month, but has now put it on hold till it gets clearance from the RBI.
In May, Paytm had announced a tie-up with American taxi-hailing app Uber and China’s Ant Financial Services Group, which owns Alipay, for allowing Chinese and Indians travelling abroad to pay for their rides using these payment apps in more than 400 cities.
The move was to eliminate the linkage of additional payment methods by connecting a dual-currency credit card to pay for rides while travelling abroad.
However, the Delhi-based company, owned by One97 Communications Ltd, in a clarification advertisement published in national dailies stated: “While mobile technology can create low-cost and friction-free alternatives for cross-border small-value payments, the same is subject to licensing under FEMA (Foreign Exchange Management Act, 1999).
FEMA Any cross-border payment services by the payments bank will be offered subject to FEMA authorisations and RBI approvals. As such, Paytm wallet cannot be used for overseas payments.” The RBI pens the regulations for FEMA, while the rules are set by the Centre.
Rohan Mahajan, a lawyer and founder of legal-tech start-up LawRato, said FEMA regulations do not permit semi-closed wallets, such as Paytm, to be used for international payments.
When asked to clarify the position, a Paytm spokesperson said, “Paytm had announced the potential tie-up with Uber and Alipay on technical integration, which could allow our users to use Paytm for paying for Uber services overseas. While we are working on the services to go live, we would like to state that we would enable usage of the service in compliance with the current banking guidelines which allow banks to carry out cross-border payments. Our statement in today’s newspapers is a step towards ensuring transparency in the ongoing service launch.”