Issuing prepaid payment instruments by banks to retailers in bulk is being misused to generate transactions, which is helping some of the fintech firms show a high volume. Investors take into consideration certain parameters such as volume growth during funding rounds.
According to sources, while earlier “click farms” were used to generate accounts for “fake likes” or “fake reviews” on social media platforms, now there is software to gain pricing arbitrage opportunities by using mass-generated prepaid accounts or digital wallets. Fintechs facilitates distributors, retailers as business correspondents to issue bank prepaid cards in a straight-through manner.
The fintech sources have said that retailers are able to get Aadhaar cardholders to the front for transactions. Multiple SIM cards can be obtained by using each Aadhaar card and each SIM is used to open various prepaid accounts from different banks. Thus, each prepaid instrument is used to do a number of transactions. Considering the volume generated, the transactions are carried out using bots.
