Wallet cannot be used for overseas payments: Paytm

A screenshot of the Paytm site.  

Paytm said on Friday that its wallet cannot be used for overseas payment under the current regulations. The firm issued a clarification via a newspaper advertisement and said it is providing the update for usage of Paytm on Uber through tie-up with Alipay.

Last month, Paytm, which is backed by Alibaba said its wallet users will be able to pay from their Uber cab rides abroad in Indian rupees. This would happen through integration with Alipay.

“While the mobile technology can create lower cost and friction free alternatives for cross border small value payments the same is subject to licensing under FEMA (Foreign Exchange Management Act, 1999),” Paytm said in the clarification. “Any cross border payments services by the payments bank will be offered subject to FEMA authorisations and RBI approvals. As such, the current Paytm Wallet cannot be used for overseas payments,” it said.

Further, it said the proposed tie up with Alipay does not envisage use of the current Paytm Semi closed wallet for cross border transactions. “As per the existing authorisation, the wallet can only be used in India and any impression that the existing Prepaid Payment Instruments (PPI) semi closed wallet can directly used offshore/for cross border transactions is unintentional,” it added.

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 as a payment option 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 do a cross border payments. Our statement in today's newspaper was a step towards ensuring transparency in the ongoing service launch.”

Amarjeet Singh, Partner, KPMG in India said the current FEMA regulations do not permit semi closed wallets to be used for offshore payments.

“The RBI gives specific permission for pre-loaded forex cards issued by banks for doing overseas payments. Even this is done through special permissions,” he said.

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Printable version | Oct 24, 2021 1:13:50 PM |

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