RBI directs payment firms to track high-value, fishy transactions during elections

The Reserve Bank of India (RBI) has instructed all regulated payment companies to monitor high-value or suspicious transactions during the general elections, as per multiple senior executives familiar with the matter. In a letter dated April 15, the central bank directed payment system operators (PSOs) to prevent any potential misuse of electronic fund transfer mechanisms that could influence voters or indirectly fund candidates participating in the elections.
According to one of the executives quoted by ET, “The regulator wants payment companies to track high-value merchant payments specifically.Also recurring person-to-person payments can be brought under scrutiny.”

The directive applies to fintech companies such as Razorpay, Cashfree, CCAvenue, and Mswipe, which are all regulated payment aggregators, as well as mobile wallet licence holders like PhonePe and MobiKwik.
The RBI’s directive cites concerns raised by the Election Commission of India, the apex body conducting the elections. Payment companies have been asked to track dubious transactions and report them to the relevant authorities.
Historically, cash in circulation has increased during elections, and the RBI has typically instructed banks to monitor the movement of cash. However, industry insiders noted that this is one of the first instances where the regulator has specifically called out payment companies and asked them to track digital payment movement, given the widespread adoption of digital payments and the popularity of Unified Payments Interface (UPI) and card payments.