> Because certain people used to evade tax by purchasing goods directly with their Paypal balance. So, instead of catching the tax evaders the RBI found it easier to ban the whole thing.
PayPal wasn't helping in catching certain people either - or wasn't willing to come under the ambit of Indian banking/taxation rules. Besides how do you think one can "catch" certain people without actually enforcing some rules that companies agree to follow?
You can work around it by asking a card processor to generate a bill every month and send it to the customer for an online payment - that's how ISPs do it. I am sure you know this.
> Even big companies like Uber had to recently discontinue Credit card purchases because of these inane credit card policies of RBI
Really?
Flipkart does it, Amazon does it, Ola does it. Every damn company out there can do it but somehow Uber was/is unable to do it, right? Why? Because they didn't want to implement or go through the extra level of security added to every credit card transaction (either online - iPin or OTP, or off-line - PIN). That's one of the best security features RBI has introduced and I believe every country should have such additional plastic money security layers.
> I really don't think it's about customer security (since the rest of the world seems fine with it)
No, rest of the world isn't fine with it. And even if they are (let's assume for argument's sake) doesn't mean India should be too. Especially since seeing the minimal level of surveillance (it's a different devil altogether), policing, awareness and infrastructure to support these measure India has. So? India should let the fraud, thefts carry on till it catches up in infrastructure? I don't think so.
> Now what can we do about it?
First, imho, stop thinking on the lines that - these changes were made just to antagonize you "Startup people" and were not actually meant for consumer security, because they were and I as a, consumer, feel safe as hell having the ability to clear transactions with a PIN that only I know and a criminal can't do shit even if he/she has my credit card number, Exp date, and even CVV # - ridiculously all that is required to clear a transaction in many countries in of "rest of world" - esp. online. India is a huge nation and saying that credit card penetration is low might be the understatement of the century. People from all kinds of social, educational backgrounds are starting to use plastic money and they need these "ridiculous" security measure (just like I do).
Now, yes implementation is not as it should have been or isn't ideal, but try to see the limitations and maybe come up with an idea and suggest it to the proper authority. Maybe collaborate with other founders and try to reach the RBI head - heard he is a very genuine and reasonable guy. But remember you should go with a plan and not a rant!