What is the Payment and Settlement Systems Act 2007

Today, I am reading my written agreement terms with PayuMoney. It is the website which provide payment gateway. At this time, there is no payment gateway in my online stores. So, I am very interested to connect it. After this, my customer can pay me through one click of their debit and credit card. Same money will go to my Nodal Account and after following the TOS, I will get this money in my saving account.

So, it is necessary to study it before signing this written agreement which came few days ago to my official address. One of its condition that it follows the rules of payment and settlement systems act 2007. Before this, I do not know this act. So, I tried to search it and read pdf of RBI which was publish online for general awareness. I am sharing its simple rules after understanding it.

  1. It will apply on whole India.
  2. It has given some definitions like online fund transfer or electronic fund transfer. It has defined system. It means, payment system through debit and credit card. 
  3. It has explained different authorities under this act. All powers in the hand of RBI for applying this law. Because there are lots of companies are opening everyday which will be fake if it will not follow this act which will control by RBI
  4. If any company want to start online payment system through payment gateway service, it has to apply to RBI. For this, it has to pay its fees. Only after this, it will be given the authorization. 
  5. RBI can revoke if any company who has authorization will not follow the provisions of this law.
  6. RBI's authorized officer can check the computer systems of payment system provider. It means, RBI can check the computer system of PayuMoney or Rupay. Ok.
  7. RBI can audit the all documents of payment system providers. 
  8. It is the duty of payment system provider that its representative employees must connect with RBI employees.
  9. It is the duty of payment system provider to explain the term of service to its payment system participants. For example, I am merchant it means, if I am taking the service of payment system provider. Payment system provider will disclose all its term and condition with me. 
  10. If there is any dispute between payment system provider and beneficiary party, it will be solved by system panel. 
  11. In case of dishonour of online payments, it must be refunded within 30 days.
  12. If any body breaks its rules and regulation will go to jail for not less than one month. and maximum time of jail will be 10 years. If you will fail to follow its provision 7, you have to give fine of one crore rupees. 
  13. If any authorized party provide false statement under this act, he or she will go to jail for 3 years and eat the food of Govt. in jail. 

Remember :

  • Payment and Settlement System Providers are not bank. These are parties who provide gateway. With its provided system, online customer can transfer money easy to other bank account through its debit or credit card. 
  • Banking Payment and settlement system in India is controlled under the Payment and Settlement Systems Act 2007.
  • RBI wants "safe, secure, sound, efficient, accessible and authorize  system of payment in India". At this time more than 130 million ATM debit and credit card have been circulated. So, it is big risk to loss the money of customer in compromisation  at the payment gateway. So, for safety of this, this law was applied in India. 

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Accounting Education: What is the Payment and Settlement Systems Act 2007
What is the Payment and Settlement Systems Act 2007
Accounting Education
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