According to six industry insiders, Indian cryptocurrency exchanges are trying to acquire viable, long-term payment options to ensure flawless payments after banks and payment gateways break relations with them.
The exchanges are trying to keep up after India’s central bank, the Reserve Bank of India (RBI), warned banks to stay away from digital currencies, citing concerns about their influence on financial stability. According to social media and users, customer complaints have flooded all of India’s primary exchanges as major payment gateways have pulled out, affecting transactions.
“Banks are reluctant to do business,” said Avinash Shekhar, co-founder, and CEO of ZebPay, one of India’s oldest crypto exchanges that do not offer an instant settlement.
“We have been talking to several payment partners, but progress has been slow.”
According to the leaders of five crypto exchanges, options being considered to include partnering with smaller payment gateways, developing their own payment processors, deferring quick payments, and solely allowing peer-to-peer transactions. As its bigger counterparts severed connections, at least two exchanges have partnered with Airpay, a smaller payment processing business. According to industry estimates, India has over 15 million cryptocurrency investors who own more than 100 billion rupees ($1.34 billion).
Certain crypto exchanges, like WazirX, are obliged to limit their transactions to peer-to-peer on specific days, while others, like Vauld, accept bank transfers with manual settlement while they look for a payment processor to back up their settlements.
Other big payment gateways like Razorpay, PayU, and BillDesk have cut connections since they, too, rely on banks to handle payments, and the withdrawal of huge banks has left them spinning. A request for comment from the three payment processors was not returned. Others, like Coinswitch and WazirX, have partnered with Airpay, a smaller Mumbai-based trading platform, for fast transactions.
The payment system is sponsored by Kalaari Capital, a venture capitalist, and Rakesh Jhunjhunwala, a billionaire stock investor who has been vocal in his resistance to cryptocurrency. Jhunjhunwala did not respond to an email seeking comment right away.
Modest payment gateways have struggled to handle huge numbers of transactions, resulting in numerous failures and a deluge of customer complaints. Because of the absence of bank assistance, smaller businesses, like their bigger counterparts, are avoiding crypto operations.
“Partnership with the smaller payment processors has not emerged as stable yet, and is more of a temporary solution,” claimed the founder of an Indian crypto exchange, who requested anonymity.
Companies, such as Bitbns, have created their own basic payment processor, allowing some key transactions without the need for advance clearance from India’s national bank, the Reserve Bank of India.
“These are only stop-gap arrangements and not a solution to the problem the industry is facing,” Gaurav Dahake, chief executive of domestic exchange Bitbns stated.
Restriction did not bode well for customers, who were compelled to use peer-to-peer (P2P) exchanges, which enable buyers and sellers to interact directly.
“Predictably, alternate transaction methods such as P2P have increased, which makes the market more inefficient and also exposes customers to the risk of fraud,” asserted the chief executive of another crypto exchange.