Karti P. Chidambaram, a member of parliament, wrote a letter to the Finance Minister of India, Nirmala Sitharaman, subject to ‘challenges concerning payment rails’ integration and resultant banking services in the Web3 sector’ on September 21.
On Twitter, Chidambaram posted this, citing, “There are certain challenges concerning payment rails’ integration&resultant banking services in the Web3 sector. The denial of use of UPI for VDAs has led users to foreign platforms The GoI must permit the resumption of UPI/payment services.”
The letter states “I am writing to bring to your attention the challenges concerning payment rails’ integration and the resultant banking service in the Web3 sector, built on blockchain technology and Virtual Digital Assets (VDAs).
As per the letter, blockchain and VDAs, such as cryptoassets and NFTs, are poised to influence how the internet develops in the future. The growth and success of the VDA ecosystem depend on reliable payment systems being accessible, especially the Unified Payments Interface (UPI).
“It is pertinent to note that many Vinal Asset Service Providers (VASPs) are grappling with operational challenges due to a lack of continuity in payment rails for end users. Obtaining Merchant Category Codes (MCCs) and processing VDA-related transactions, such as UPI, has proven to be a significant hurdle,” Chidambaram said in a letter.
Furthermore, the VDA ecosystem is unable to accept common payment methods like credit and debit cards due to its limited integration with payment aggregators and gateways. For fully compliant Indian VDA investors, this restriction has also raised the possibility of financial losses. Their access to capital and ability to conduct business are directly hampered by the inadequate banking infrastructure.
For this reason, he wants to resume UPI services to ensure uninterrupted and seamless service in the VDA sector. The Union government must permit the resumption of UPI and payment services.