Indian bank card payments being declined on international lottery sites is a common issue faced by many lotto players in the country. This article discusses the reasons behind these failed transactions and ways to successfully buy lottery tickets online using funds from an Indian bank account.
Before we begin, let’s do the homework.
RBI, FEMA, and Bans
Who’s the RBI?
The Reserve Bank of India (RBI) is India’s central bank, established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934. The RBI’s main functions include the following:
- Formulating, implementing, and monitoring the monetary policy of the country to maintain price stability and ensure an adequate flow of credit to productive sectors
- Regulating and supervising the banking system to ensure its stability and integrity
- Overseeing the country's foreign exchange and gold reserves
- Acting as the government's banker as well as fiscal agent
- Issuing and regulating banknotes
- Acting as a lender of last resort to banks in times of financial stress
- Promoting financial inclusion and development of the rural economy
- Acting as a regulator for the payment and settlement systems
The RBI is headed by a Governor, who is appointed by the Government of India for a period of three years. Four Deputy Governors and other senior officials assist him. The central office of the Reserve Bank of India is located in Mumbai, with regional offices in various other cities across the country.
FEMA stands for Foreign Exchange Management Act. It is a legal framework passed by the Indian parliament to consolidate and simplify the laws related to foreign exchange transactions in India.
The Act was passed on December 29, 1999, with the main objective of facilitating external trade and payments, and promoting the orderly development and maintenance of the foreign exchange market in India. It replaced the previously passed Foreign Exchange Regulation Act (FERA) and was extended to the entire country.
FEMA is in line with the pro-liberalization policies of the Indian government and the World Trade Organization (WTO). It also paved the way for the introduction of the Prevention of Money Laundering Act of 2002, which came into effect on July 1, 2005.
What Is the RBI's Role in Relation to FEMA?
The Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) are interconnected in the sense that the RBI is responsible for making rules and issuing notifications to implement and enforce the regulations set out by FEMA.
The goal is to maintain the stability and integrity of the foreign exchange market in India. Accordingly, the RBI has the power to authorize any person to deal in foreign exchange. This authorized person is known as an authorized dealer or money changer.
FEMA mandates the following as RBI’s primary functions:
- Issuing general or special permission for dealing in foreign exchange to control the same
- Requiring prior approval of the RBI for specific current account transactions as outlined in the Foreign Exchange Management (Current Account Transactions) Rules, 2000
- with the consultation of RBI and Discussing with the Central Government to impose restrictions on current account transactions as outlined in the Foreign Exchange Management (Current Account Transactions) Rules, 2000, and making rules for the same
- Setting down conditions for capital account transactions
- Framing regulations for:
- Issue or transfer of foreign security to residents
- Issue or transfer of Indian security to non-residents
- Borrowing and lending in foreign exchange
- Borrowing to and lending from a foreign person
- Exporting and exporting currency notes
- Transfer of immovable property outside the country
- Guaranteeing or giving surety for foreign exchange transactions
- Framing regulations for foreign exchange due from the export of goods and services;
- Framing regulations for the realization, possession, and repatriation of foreign money or accounts acquired from businesses
- Authorizing people to deal in foreign exchange
What’s Allowed and What’s Banned?
According to the Reserve Bank of India (RBI), residents of India are permitted to use International Credit Cards (ICC) and International Debit Cards (IDC) on the internet for any purpose for which foreign exchange can be legally obtained from an Authorized Dealer in India.
Monetary transactions are legal for:
- Import of books
- Purchase of downloadable software
- Import of items allowed under the EXIM Policy
Monetary transactions are illegal for:
- Purchase of foreign lottery tickets
- Betting on football matches
- Betting on horse races
- Purchase of banned or proscribed magazines
- Payment for sweepstakes entries
- Payment for call-back services
What’s the Penalty?
The penalties for violating FEMA regulations include any of the following:
- A fine 3x the value of the transaction in question (based on the Indian currency value)
- A 5-year prison sentence
Furthermore, the violator can also be barred from holding the bank card.
Must All Banks Follow FEMA Rules?
After observing some customers send funds from Indian bank accounts to overseas entities and receive cash refunds in return, the RBI has advised banks in India to exercise caution when it comes to online foreign exchange trading.
Banks have been told to be vigilant in opening accounts for individuals or businesses for the purpose of collecting margin money, investment money, etc. in connection with such transactions.
They must now inform their customers that any person who collects or remits payments outside of India for foreign exchange trading through electronic portals is subject to the Foreign Exchange Management Act (FEMA) and regulations for Know Your Customer (KYC) and Anti Money Laundering (AML).
Accordingly, banks are now asking their cardholders not to use their international credit and debit cards to make illegal transactions. This explains the frequently declined payments when you attempt to buy tickets to world lottos from India.
Can I Use Domestic Indian Bank Cards to Purchase International Lottery Tickets?
Domestic Indian bank cards will be accepted only within the Indian network. It means you cannot use them to purchase international lottery tickets online, as the sites enabling such transactions are based outside the country.
How Do I Legally Buy Lotto Tickets Online With My Indian Money?
To buy lotto tickets online with your Indian money without facing the wrath of the law, you can…
- Use an e-wallet
- Pay with UPI
Using an e-wallet is the safest option. You’ll transfer funds from your bank account to the e-wallet and then use it to purchase the ticket. If you win, you will be paid out in your e-wallet and can choose to cash out as and when you wish.
That way, the transaction won’t show up on your bank statement as one made to or received from a lottery site (which is considered illegal). Check out our detailed guide on how to deposit to an international lottery site with an e-wallet.
On the other hand, when you pay with UPI, you’re almost always sending money to another UPID or Indian bank account. International lottery sites enable this by having someone in the finance department with an Indian bank account collect all funds.
In this way, the transaction is never considered illegal, and you can still buy tickets to your favorite lotteries.
Is Violation of FEMA the Only Reason My Bank Card Payment Failed?
Here are a few other possible reasons your bank card transaction failed:
- Your card has expired or is blocked.
- You’re over your credit limit (for credit cards).
- You entered the wrong PIN.
- You’ve exceeded the bank transaction limit.
Jump to a conclusion only when you are sure none of the aforementioned issues is present. You should also try contacting the customer service department of your bank to dig deeper and fix the issue.
Can I Buy Tickets to a Local Indian Lottery Sith a Credit or Debit Card?
You can buy tickets to local Indian lotteries using credit and debit cards only if the games are legal in your state. Currently, the lottery is legal in 13 Indian States – Assam (Bodoland), Arunachal Pradesh, Goa, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, West Bengal .
Please note that tickets to none of these lotteries are available online. You need to purchase paper tickets from authorized vendors and retailers to participate. However, you can always transfer money to their accounts using a credit or debit card! There’s no ban on that!