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Ask HN: What is wrong with Reserve Bank of India?

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Re: Ask HN: What is wrong with Reserve Bank of India?

#41

Post by ceejayoz »

driverdan wrote: post #34
arihant wrote: post #23

I don't see how unsecured CC is good for us. Credit card fraud raises national debt, makes your economy reliant on derivatives such as insurance and in the end you fall down. Maybe US economy could sustain derivative based approach because of it's size, but India would be in much worse position if something like 2008 happened here. Now, that said, this could be an opportinity for a startup, so stop complaining for a…

> Credit card fraud raises national debt, makes your economy reliant on derivatives such as insurance and in the end you fall down. That's not how credit cards work. Credit card fraud is never shouldered by the country, only the banks and stores that fall victim to it. There's no insurance involved, it's a cost of accepting credit cards. > Also SaaS has nothing to do with recurring CC. Don't you use postpaid services…

> Credit card fraud is never shouldered by the country, only the banks and stores that fall victim to it.

It doesn't become part of the formal national debt tally, but a country full of debtors who can't pay their bills is sure as hell a drag on a country's economy.

Re: Ask HN: What is wrong with Reserve Bank of India?

#42

Post by ollysb »

arihant wrote: post #23

I don't see how unsecured CC is good for us. Credit card fraud raises national debt, makes your economy reliant on derivatives such as insurance and in the end you fall down. Maybe US economy could sustain derivative based approach because of it's size, but India would be in much worse position if something like 2008 happened here. Now, that said, this could be an opportinity for a startup, so stop complaining for a…

The issues you describe regarding debt only apply to credit cards. There's no reason to have to pay with credit though, you can use debit cards in exactly the same way.

Re: Ask HN: What is wrong with Reserve Bank of India?

#43

Post by sergiotapia »

Regarding recurring payments: this is a good thing in the eyes of the consumer. I want to pay for 1 month of something and only one month - and I find it pretty scummy that most companies don't allow for that. For example, Netflix, CodeSchool, etc.

Sure I can 'subscribe' for one month and then cancel, but why should I have to go through that step? What if I forget and three months down the line I remember that I had to manually cancel my sub?

Re: Ask HN: What is wrong with Reserve Bank of India?

#44

Post by lnanek2 »

programmer_dude wrote: post #7

>In India, you cannot create recurring subscriptions as the RBI prohibits charging the credit card automatically. I am really happy that this is how it is. There is no shortage of cheats and frauds in India. Thanks to the RBI I can rest easy without worrying about getting (unsanctioned) charges on my credit card from shady businesses. The RBI does provide an alternate means for supporting recurring bills. If you are…

Seems like a good opportunity for an Indian startup to make an Uber for India that easy ECS billing each month or before each month or something. I'd happily take an auto-debit of my average spend each month over having to manually do each payment. Maybe keep credits in the account if they go unused.

Re: Ask HN: What is wrong with Reserve Bank of India?

#45

Post by tormeh »

captn3m0 wrote: post #36
tormeh wrote: post #33

Earlier quoted context omitted.

Why not send their customers a monthly bill and cancel service if the user doesn't pay? The customers just set up a recurring monthly payment in their bank.

Yes, this is a workaround that is not directly supported by any payment gateway in India so far, which means you have to implement the entire thing yourself.

It's not a workaround, though; it's more consumer-friendly than the "normal" subscription model.

That companies can just pull money out of your bank account is not a good thing. In Germany it's really hard to get people to sign up for subscriptions because companies usually make it really hard to unsubscribe and just continue pulling money from the account. With a push-model like the one described above, the customer just cancels the payments and that's the end of it.

Re: Ask HN: What is wrong with Reserve Bank of India?

#46

Post by arihant »

driverdan wrote: post #34
arihant wrote: post #23

I don't see how unsecured CC is good for us. Credit card fraud raises national debt, makes your economy reliant on derivatives such as insurance and in the end you fall down. Maybe US economy could sustain derivative based approach because of it's size, but India would be in much worse position if something like 2008 happened here. Now, that said, this could be an opportinity for a startup, so stop complaining for a…

> Credit card fraud raises national debt, makes your economy reliant on derivatives such as insurance and in the end you fall down. That's not how credit cards work. Credit card fraud is never shouldered by the country, only the banks and stores that fall victim to it. There's no insurance involved, it's a cost of accepting credit cards. > Also SaaS has nothing to do with recurring CC. Don't you use postpaid services…

Invoicing does not scale? I bet if you write down a list of world's largest, most scaled out services that charge monthly, most of them would be using invoicing as the main mechanism.

In India, don't you think invoicing scales for BSNL, Airtel, BSES, etc.?

And there is a huge insurance component inc credit cards. Ever see the difference in accepting rates of CC and a debit card? Ever wondered why that is? Every damn transaction you do requires heavy handed underwriting. The underwriting requires insurance. If the underwriter pays later than the bank needs it, the bank needs insurance backbone to fall on. On individual fraud basis, banks themselves come under debt for extensive periods of times while the underwriter sits and decides. The rectification with the customer itself takes months during which the bank is in debt.

The reason you're paying Visa or MasterCard any money is in hope that they underwrite in case there is a fraud or customer can't pay. How else do you define insurance?

Re: Ask HN: What is wrong with Reserve Bank of India?

#47

Post by orbifold »

zodvik wrote: post #38
twilightfog wrote: post #32

Earlier quoted context omitted.

After a search, I see that companies need to obtain the necessary clearances from RBI (Indian or international) to charge recurring payments on credit cards. These are only granted to businesses with established track records. So, yes, a SaaS startup might not qualify for it. But as a consumer, I'm actually happy with this RBI policy.

The problem with that -> there is no well defined criteria for what "established track records".

I'm guessing it is companies that have enough money and influence to get the right government officials to "listen" to them.

Re: Ask HN: What is wrong with Reserve Bank of India?

#48

Post by brighton36 »

Bitcoin will solve most of these problems over time. Recurring payments isn't in yet, but other than that the tech is pretty close to where you need it to be. Probably theres a lot of room for a startup to come and offer value transfer solutions for indian citizens from outside the RBIs jurisdiction.

Re: Ask HN: What is wrong with Reserve Bank of India?

#49

Post by todd3834 »

lnanek2 wrote: post #44
programmer_dude wrote: post #7

>In India, you cannot create recurring subscriptions as the RBI prohibits charging the credit card automatically. I am really happy that this is how it is. There is no shortage of cheats and frauds in India. Thanks to the RBI I can rest easy without worrying about getting (unsanctioned) charges on my credit card from shady businesses. The RBI does provide an alternate means for supporting recurring bills. If you are…

Seems like a good opportunity for an Indian startup to make an Uber for India that easy ECS billing each month or before each month or something. I'd happily take an auto-debit of my average spend each month over having to manually do each payment. Maybe keep credits in the account if they go unused.

What does that have to do with Uber? I'm missing the connection.

Re: Ask HN: What is wrong with Reserve Bank of India?

#50

Post by twilightfog »

zodvik wrote: post #38
twilightfog wrote: post #32

Earlier quoted context omitted.

After a search, I see that companies need to obtain the necessary clearances from RBI (Indian or international) to charge recurring payments on credit cards. These are only granted to businesses with established track records. So, yes, a SaaS startup might not qualify for it. But as a consumer, I'm actually happy with this RBI policy.

The problem with that -> there is no well defined criteria for what "established track records".

an established business with 3 years+ track record OR $3 million or more in transactions.

I assume that's how PayPal got it, they certainly qualify for the $3 million criteria.

If they lower the bar, they will have to do it for everyone, and a lot of unscrupulous businesses will try to place recurring chargebacks. What's wrong with billing the client every payment cycle, or let them pay on longer durations, like quarterly? Refund extra money if someone discontinues earlier. Plenty of options, until 3 years of a financial history, then apply for a RBI clearance.

Credit card fraud is very common across the world, maybe the guidelines can be more clear and the clearance process made simpler, however I don't see why a startup should be allowed to place recurring charges on cards unless they have been a trustworthy business for a while.

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