OneCard RBI: Concerns Raised by the Reserve Bank of India On OneCard

OneCard RBI: In response to concerns raised by the RBI, OneCard suspensions prompt industry shifts in fintech partnerships.

also read: Federal Bank Share Price History: A Guide for Prospective Buyers

Introduction: OneCard RBI

In response to concerns raised by the Reserve Bank of India (RBI) regarding data storage practices, several banks have suspended their partnerships with the co-branded card fintech firm OneCard. The RBI issued a circular on March 7, 2024, emphasizing that card-issuers must retain ownership and control over cardholder data. It stated that sharing card data, including transaction information, with outsourcing partners should only occur if essential for their assigned functions and with explicit consent from the cardholder.

The Impact on Partner Banks

Federal Bank and South Indian Bank Take Action

Federal Bank and South Indian Bank, in response to the RBI’s circular, halted the onboarding of new customers for their co-branded credit cards with OneCard. These decisions were made to ensure compliance with the RBI’s regulations on data security.

Potential Ripple Effect

While other banks with partnerships with OneCard have not yet taken similar steps, it is anticipated that they may follow suit. The concern stemmed from the indirect access OneCard had to customer data through the credit card software stack provided to partner banks.

OneCard’s Response and Future Prospects

OneCard’s Indirect Data Access

Although OneCard did not directly access customer data, its involvement in providing the software stack raised regulatory scrutiny due to potential data access.

A Temporary Setback?

Industry insiders suggest that the pause in partnerships may be temporary. Once OneCard implements measures to access customer data in encrypted form, banks are likely to resume issuing co-branded cards.

Unique Proposition and Investment

The technology stack provided by OneCard enables features such as real-time transaction tracking, spending management, EMI conversion, and payments through a dedicated app, making it a unique proposition in the card business. FPL Technologies, the holding company of OneCard, founded in February 2019, has garnered significant funding from investors like Temasek, GIC, Matrix Partners, QED Innovation, Hummingbird Ventures, and Sequoia Capital, totaling $227 million.

Frequently Asked Questions (FAQs)

• What prompted banks to suspend their partnerships with OneCard?
  • Banks suspended partnerships due to concerns raised by the RBI regarding data storage practices.
• Will other banks likely follow Federal Bank and South Indian Bank’s lead?
  • It is anticipated that other banks may also suspend partnerships with OneCard to comply with regulatory directives.
• What measures is OneCard taking to address the regulatory concerns?
  • OneCard is planning to implement measures to access customer data in encrypted form to address regulatory concerns.
• How does OneCard access customer data?
  • OneCard accesses customer data indirectly through the credit card software stack provided to partner banks.
• What features does OneCard offer through its technology stack?
  • OneCard offers features such as real-time transaction tracking, spending management, EMI conversion, and payments through a dedicated app.
• Who are the major investors in FPL Technologies, the holding company of OneCard?
  • Major investors in FPL Technologies include Temasek, GIC, Matrix Partners, QED Innovation, Hummingbird Ventures, and Sequoia Capital.

Conclusion: OneCard RBI

In conclusion, the suspension of partnerships between several banks and OneCard highlights the increasing scrutiny on data security practices in the fintech industry. While these suspensions may disrupt operations temporarily, OneCard’s innovative solutions and strategic investments position it well to address regulatory concerns and resume partnerships in the future.

In response to concerns raised by the Reserve Bank of India (RBI), OneCard Rbi suspensions have initiated discussions and actions within the fintech industry. With careful measures and compliance, the partnership landscape may see a positive shift, ensuring both regulatory adherence and continued innovation.

also read: RBI mandate spurs banks to halt OneCard partnerships over data storage concerns