With the advent of digital payments, transactions have become easier. Especially in retail, the problem of fraud has reduced. The use of digital payments in India is growing rapidly. Due to UPI, net banking, mobile banking and card payments, cyber fraud and online fraud cases are increasing steadily. In the era of increasing digital payments, the Reserve Bank of India (RBI) is going to take a big step to prevent online fraud. The RBI has proposed that if a user transfers more than Rs 10,000 online, then it may take an hour for the payment to be completed. Rs 10,000 will not be paid instantly. The country’s banking industry has supported this security measure, but has also expressed concerns about the convenience and technical difficulties of the common man. Banks believe that this rule will help prevent fraud, but the common man may face difficulties in day-to-day transactions.
Online transfers above Rs 10,000 will not be instant – In a discussion paper published in April, RBI recommended that when an individual customer, owner or associated entity initiates a digital payment of more than Rs 10,000, there will be a delay of one hour before the transaction is completed. This delay will be applicable only at the payer level. The main objective of this rule is to prevent fraud cases. According to banks, this one-hour delay will give customers time to reflect and assess whether they are sending money to the right destination or not. If a customer is buying a mobile phone worth more than Rs 10,000, they will not want to wait for an hour at a shop to submit their payment. Therefore, flexibility in this rule is very important.
Huge cost challenge for banks – To implement this new security measure, banks will have to make significant changes to their current digital payment infrastructure. They will have to create new transaction queues (queues). Transactions will have to be enabled during the cooling-off window. The entire settlement process will have to be recoded. According to bank officials, implementing these measures could be costly. This concern is compounded at a time when banks are already facing financial stress due to the zero-merchandising discount rate (MDR) on UPI.
Banks are not allowed to charge any fees from merchants for UPI transactions. Sufficient investment of around Rs 10,000 crore per annum is required to maintain and expand the digital payments ecosystem, a significant part of which is currently being borne by banks and payment service providers. India’s digital payments ecosystem is unique in the world in terms of its speed and scale. RBI has developed this proposal based on the global experience of countries like UK, Singapore, Sweden, US and Ireland.
