This special investigation by Cobrapost and India News brings to light how private companies are selling swipe machines throwing all legalities and caution to wind to cash in on the huge business opportunity that demonetization has brought to them. However, their profit-making spree may defeat the purpose of going cashless, and, in fact, these machines may land up in the hands which may use them to the detriment of Indian economy and public interest.
Swipe machines are important tool for a cashless India, the dram project of the present government, and these machines are used by consumers for making direct payment by swapping their debit and credit cards, a form of cashless transaction. However, the Cobrapost investigation reveals that these private companies are selling their swipe machines without following guidelines.
In order to stop corruption and the hold of black money, Prime Minister Narendra Modi announced note ban on November 8, 2016. The decision led to a lot of hardship to the general public. People were forced to stand in serpentine queues for hours and days to deposit the banned currency and to withdraw their own money. The argument proffered by the government was that demonetization will lead to people switching more and more to digital mode of transactions. As a result, demand for swipe machines skyrocketed overnight and even banks could not get enough machines to help themselves and meet the surge in the demand by their customers. According to RBI data, demonetization has added 1.6 million to the number of cashless transactions which stood at 50 million before the government took the decision. Evidently, digital transactions have indeed increased substantially as you may find petty shopkeepers, grocery store owners, vegetable vendors and even tea sellers using swipe machines to receive payments contributing to PM Modi’s dream of making India cashless.
But has demonetization stopped black money or has checked corruption in terms of bribery? Such questions still remain? To find answers to these questions, Cobrapost team launched an investigation. You also read how people are doing black marketing and bribery through swiping machine. The objective of this investigation is to expose those who are punching holes into the government claims of demonetization being an attack on black money.
Our investigation reveals that these swipe machines sold unscrupulously by private companies can be had by bullion trade, NGO and hawala operators who can put them to good use and beat the system. Even someone who is running a sex racket can avail himself of this tool to ply his trade with impunity. Let us show you a guideline of the Indian Overseas Bank, for example, which clearly states the saving bank account is meant for commercial or business transactions. Now, the question is how private companies can so easily sell their swipe machines to such individuals on the basis of their saving bank accounts.
Naturally, questions such as these assail our minds:
- Can swipe machines be given on personal accounts?
- How can daily business transactions be made possible using personal accounts?
- Do the KYC norms hold no water for providing swipe machines?
- Should the verification of account holder not be made beforehand?
- How can a private company sell a swipe machine to anyone without due diligence, without properly verifying what business an individual is doing? Are they doing it knowingly?
- Are there any clear RBI guidelines with regard to providing swipe machines?
The private companies which are in the business of selling swipe machines should keep such questions in their mind when they sell a unit to an individual and check if that individual deserves it or not? Our investigation finds opposite to what should have been the ideal situation.
There were three companies who were caught in this investigation, mswipe, paynear and cardpay doing these malpractices and several of their senior officials were involved.
This way the investigation brings into light the reality of big and famous companies who are sell swipe machines and how these companies are promoting the crime and corruption.
