4 Minutes by Reuters Staff Read MUMBAI, India (Reuters) – According to six industry insiders, Indian cryptocurrency exchanges are scrambling to obtain viable, long-term payment alternatives to ensure seamless transactions after banks and payment gateways cut connections with them. PHOTO FROM THE FILE: This illustrative picture shot on June 2, 2021 shows representations of cryptocurrencies such as Bitcoin, Dash, Ethereum, Ripple, and Litecoin. REUTERS/Florence Lo/File Photo/Illustration The exchanges are straining 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 big exchanges as major payment gateways have pulled out, affecting transactions. “Banks are hesitant to conduct business,” said Avinash Shekhar, co-founder and CEO of ZebPay, one of India’s oldest crypto exchanges that does not offer instant settlement. “We’ve been in contact with a number of payment partners, but progress has been slow.” According to the heads of five crypto exchanges, options being considered include partnering with smaller payment gateways, developing their own payment processors, deferring rapid payments, and solely enabling peer-to-peer transactions. As its larger colleagues break connections, at least two exchanges have partnered with Airpay, a smaller payment processing provider. According to industry estimates, India has almost 15 million cryptocurrency investors who have more than 100 billion rupees ($1.34 billion). Some crypto exchanges, like WazirX, are compelled 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. Even big payment gateways like Razorpay, PayU, and BillDesk have cut relations since they, too, rely on banks to handle transactions, and the withdrawal of large banks has left them reeling. A request for comment from the three payment processors was not returned. Others, including Coinswitch and WazirX, have partnered with Airpay, a smaller Mumbai-based payment processor, for rapid transactions. The payment gateway is supported by Kalaari Capital, a venture capital firm, and Rakesh Jhunjhunwala, a billionaire stock investor who has been vocal in his opposition to cryptocurrencies. Jhunjhunwala did not respond to an email seeking comment right away. Smaller payment gateways have struggled to handle enormous amounts of transactions, resulting in numerous failures and a deluge of customer complaints. Because of the lack of bank assistance, smaller businesses, like their larger counterparts, are avoiding crypto activity. “Partnerships with smaller payment processors have not shown to be stable, and are more of a temporary solution,” claimed the founder of an Indian crypto exchange, who requested anonymity. Others, such as Bitbns, have created their own basic payment processor, allowing some important transactions without the need for prior clearance from India’s central bank, the Reserve Bank of India. “These are merely band-aid solutions to the industry’s problems,” said Gaurav Dahake, CEO of domestic exchange Bitbns. Prohibition did not bode well for customers, who were compelled to use peer-to-peer (P2P) transactions, which allow buyers and sellers to interact directly. “Alternative transaction methods such as peer-to-peer have grown in popularity, making the market more inefficient and exposing clients to the risk of fraud,” stated the CEO of another crypto exchange. $1 equals 74.3650 Indian rupees. Nupur Anand contributed reporting, and Clarence Fernandez edited the piece./n
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