Central authorities have zeroed in on products offered by foreign firms like RedotPay that convert digital assets into fiat currency at points of sale. Research bodies flagged these cross-border debit structures for potentially breaching the Foreign Exchange Management Act and domestic prepaid payment norms. While formal remarks have been withheld, local users are already facing service disruptions and account terminations. Payment processors appear to be cutting off local functionality to prevent unauthorized conversion flows.
Key points
Offshore crypto cards bypass traditional domestic banking infrastructure to settle everyd…: Offshore crypto cards bypass traditional domestic banking infrastructure to settle everyday point-of-sale transactions in rupees.
Regulatory scrutiny centers on potential violations of domestic prepaid payment rules and…: Regulatory scrutiny centers on potential violations of domestic prepaid payment rules and the Foreign Exchange Management Act.
Recent payment failures indicate network processors may already be disabling domestic car…: Recent payment failures indicate network processors may already be disabling domestic card operations and associated user portals.
Sources checked by our analysis pipeline: 1
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For local merchants selling goods and services, crypto cards come across as regular debit cards from Indian banks. Just as money is debited from bank account, cryptos, like stable coins, lying in users' wallets are converted into rupees to pay merchants. Accessed from international fintech service providers like RedotPay, crypto cards are supported by global payment processing networks like VISA and Mastercard.
This seemingly furtive payment mode has now caught the attention of Reserve Bank of India (RBI) and Financial Intelligence Unit (FIU), the agency tracking suspicious transactions, two persons told ET.
Significantly, over past few days several Indian residents' access to pre-paid crypto cards and websites of service providers have been blocked.
This may have been triggered by alerts from organisations like Digital South Trust, a Bangaluru-based blockchain research entity, which obtained a virtual VISA-backed RedotPay crypto card to do multiple domestic online transactions in August. It shared the card and online purchase details with Indian authorities.
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