Bulk issuance by banks of prepaid payment instruments to retailers is being misused to generate transactions, which are helping some fintech companies show high volume. During funding rounds, investors consider parameters such as volume growth.
Sources said that while earlier there were “click farms” that used to generate accounts for “fake likes” or “fake reviews” in social media, there is now software to take advantage of pricing arbitrage opportunities by using mass-generated prepaid accounts or digital wallets. Fintechs enable retailers/distributors/business correspondents to issue bank prepaid cards in a straight through manner.
As per the fintech sources, retailers are able to get Aadhaar card holders to front for transactions. Each Aadhaar card is used to obtain multiple SIM cards and each SIM is used to open several prepaid accounts from different banks. Each prepaid instrument is then used to do multiple transactions. Given the volume involved, the transactions are undertaken using software (bots). However, the software can be used only on those sites which are without captcha code verification.
