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Beginning October 1, Indian internet users must manually renew all their subscription-based services such as phone bills, OTT platform subscriptions and systematic investment plans, among other services. This is a consequence of the Reserve Bank of India’s (RBI) new rules on auto-debit transactions that prevent merchants from automatically charging customers’ credit and debit cards for their services.
The central bank’s aim is to balance the safety of digital payments with customer convenience. The new rules require banks to send consumers a notification for all transactions up to Rs 5,000 before and after they have occurred. Banks had until September 30 to comply with the RBI’s directive. However, some of India’s largest banks including Standard Chartered and Punjab National Bank have failed to make systemic changes to allow the new rules to kick in, disrupting revenue streams of businesses that rely on subscription payments. The rules also impact news media websites – perhaps the most vulnerable segment of all digital entities on account of its infancy.
India’s digital news media ecosystem relies on subscriptions from readers and viewers to remain sustainable. It is trying to create an alternative economic model to the advertising-based one that fuels print and broadcast media, to ensure that journalism is free, fair and unencumbered by corporate or political pressures. After all, if journalism must be in public interest, then the public too must be a stakeholder in its growth.
However, the RBI’s recurring payments rules jeopardise this nascent, alternative media business model. Praveen Gopal Krishnan, chief operating officer of The Ken, a five-year-old subscription-driven business journalism website, wrote that they too had been hit “pretty badly” by the RBI’s rules.
To be fair to the central bank, it is nobody’s case that it enacted these regulations to stunt the growth of digital news media in India. Like journalism, the RBI too acts in public interest except that, in the central bank’s case, the public interest is explicit: to promote the integrity and security of payment systems, and to ensure the financial stability by effective oversight of financial institutions.
Increasingly, the RBI’s regulations go beyond the traditional remit of banking and finance into digital markets. This is evident in the extant case and imminent in areas such as storage and tokenisation of card data with online merchants. The RBI has even weighed in on the frontiers of innovation in digital markets, represented in the form of cryptocurrencies. It’s clear, therefore, that the RBI will be deeply influential in the development of the next generation of internet in India. This will often involve competing public interest determinations such as the security of online transactions versus the creation of an informed/enlightened citizenry. It will mean a wider range of consultations with new and unfamiliar actors (as far as the RBI is concerned) such as digital news publishers.
The sustainability crisis of journalism
It is easy (and lazy) to dismiss the criticism of the RBI’s rules as an elitist view, held by upper middle class urban Indians who have first world problems. However, depriving anyone access to quality news is to shut them out of a knowledge society – especially those who have aspirations of socio-economic upward mobility. That’s because digital news isn’t just consumed in English. It is a highly competitive market, with local, hyperlocal and regional players, who vie for readers’ attention and subscriptions. Especially at a time when the need for high quality journalism has never been more pressing.
In a 2018 interview to the Nieman Journalism Lab, Emily Bell, director of the Tow Centre for Digital Journalism at Columbia University, said that public service media may be about to play its most important role since the second world war. We live in an age where political forces are weaponising information and technology to create new fault lines and deepen existing ones. The pandemic of “fake news”, the manipulation of platforms to blare political propaganda and the forced multiplication of hate speech on messaging apps are hallmarks of today’s cyberspace.
In such a context, the need for top-notch journalism, backed by a sustainable economic model for the private sector, is greater than ever before. “News is hard, it’s not cheap to produce, and it needs to be consistent. And you need certain things for long-horizon stories, teams of people — maybe sometimes even generations of people — to understand them and keep following them,” Bell said in the interview. “That sustainability has always come out of a mix of the public and the private.”
In India, the sustainability that Bell spoke about has come under threat because of the RBI’s rules on recurring payments. It is time that the central bank interprets public interest more broadly than it has so far. To do so, the central bank needs to look beyond banks and engage with a wider set of stakeholders, who are directly impacted by these rules – like news media websites. This can ensure that every practical and viable policy alternative has been considered.
More importantly, before rule-making, the regulator needs to assess their possible impact on sectors/actors that it doesn’t govern. To its credit, the central bank has recently constituted a Regulations Review Authority (RRA), with a tenure of one year, to identify rules that need to be rationalised or reconsidered. However, in line with the RBI’s regulatory focus, all members of the RRA are from banking institutions. Therefore, the RBI should consider creating a regulatory impact assessment body to assess the potential economy-wide impact of its regulations on recurring payments.
The authors work with Koan Advisory Group, New Delhi.