It's a Fintech Friyay!
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RBI’s blockchain move to prevent fraudsÂ
The RBI does not like frauds, so it is moving big. With likes of HDFC, ICICI and State Bank of India among nearly a dozen top lenders, the central bank is engaging with to run a blockchain-based pilot project centred on trade financing.
If successful, it could help prevent loan frauds by the likes of Nirav Modi and Mehul Choksi, fugitive borrowers that gamed the system to siphon off thousands of crores of rupees.
Called ‘proof of concept’ in industry parlance, will harness blockchain technology where ‘blocks’ of transaction data are stored in ‘chains’ with peer-to-peer access to enhance traceability of money flow.
Tampering of documents like Letters of Credit (LC) is one of the project’s focus areas, and blockchain technology can help prevent the misuse of LCs.
The objective is to make blockchain technology a part of the Core Banking System (CBS). This particular project will test the application of the technology before it becomes established practice
The RBI is likely to use the same technology for the proposed central bank digital currency project, too.
Read more
Pine Labs is acing it’s Fintech game
Merchant commerce platform Pine Labs has acquired fintech infra co Setu, its 3rd acquisition in 2022.
Setu??
Setu has expanded its offerings and now covers payments, data, investments and lending through its automated programming interface (APIs).
Last year, it partnered with Google Pay to offer fixed deposits through Equitas Small Finance Bank.
The firm also runs open-source initiative D91 Labs to provide research and help fintech companies in complying with regulatory requirements.
Now, we see- Setu is the last piece in the puzzle!
Hear- what the founder has to say
The deal comes at a time when Pine Labs is expanding its offerings beyond merchant payments. Apart from its Point of Sale (PoS) business, where the company offers card swiping terminals to merchants, Pine Labs also develops Buy Now Pay Later (BNPL), invoice management, gifting solutions and e-commerce solutions.
Currently valued at $5 billion, the firm is also contemplating an initial public offering (IPO) in the US. Per media reports, it would raise around $500 million at a valuation of $6-7 billion from the public market.
Card tokenization could bring major changes
Before we jump into the latest update on this, last year we did a podcast on the developments around tokenization-
Okay, so let’s get going. Shall we?
Come July 1, online shopping using your credit and debit cards will become safer. RBI has directed payment aggregators, wallets and online merchants not to store any sensitive card related customer information, including full card details. The 16-digit card numbers will get replaced with a ‘token’.
The only way that you can conveniently make a card payment repeatedly is through a new process called ‘tokenisation’.
Cometh, July 1- RBI to prohibit all merchant websites from saving your card numbers, CVV or expiry date on their server for processing online transactions.
What is tokenisation of cards?
Until now, whenever you bought things from e-commerce websites or booked train or flight tickets through a travel website you had to save your debit or credit card details for ease in future transactions. You would only enter the three digit CVV number and checkout of the payment transaction within seconds. But saving card details in the current form is risky. There are instances of popular websites getting hacked by fraudsters and harvesting the saved card data.
Now, tokenisation will replace a debit or credit card’s 16-digit number with a unique token that is specific to just your card and specific for one merchant at a time. The token masks the true details of your card, so in case there is a data leak from the merchant website, the fraudster cannot misuse the card.
Source: Moneycontrol