RBI's steps to directly benefit customers and make digital payments safer

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The Reserve Bank of India (RBI) has in recent months taken steps to make the digital payments space safer for users. It has also put in place a grievance redress mechanism to deal with complaints. 

While it will take time to see the impact of these measures, some, such as the introduction of an ombudsman and tokenisation of transactions, come with direct benefits for customers. “In the past few months, we have witnessed the introduction of several regulatory policies by the RBI for the fintech industry. Beginning with the RBI’s decision on data localisation to ensuring data security of user information, these moves will help promote faster adoption of digital payments across the country,” says Sampad Swain, chief executive officer and co-founder, Instamojo.

The RBI has said it will bring payment gateways within its direct ambit. Payment gateways in the country handle transactions worth about $50 billion, according to industry sources. Once they come within the RBI’s direct ambit, they will have to follow standard policies and procedures. “Consumers can expect faster refunds and settlements once this happens,” says Reeju Datta, co-founder, Cashfree. Expect tighter control of frauds. Once the RBI starts regulating them, policies are likely to be framed to force them to act faster in the case of frauds and block the money in the receiver’s account. 

The banking regulator has also introduced an ombudsman. With rapid growth in the volume of digital transactions, such an authority was much needed. A dedicated redress authority will expedite the process of complaint resolution. Consumers will be saved the hassle of running from one service provider to another. They can now file complaints against prepaid instruments (PPIs), e-wallets, and other payment service providers with the ombudsman’s offices in 21 locations across 19 cities.

You can approach the ombudsman on almost all issues related to digital payments, including unauthorised use of funds transfer; failure to refund your money in the case of a failed transaction; inability to transfer the funds to the bank account; or not loading of funds in the wallet within a reasonable time. Even complaints related to the unified payments gateway (UPI) falls within the purview of the ombudsman. An individual can approach the ombudsman if the digital payment service provider does not satisfactorily address the complaint. Each ombudsman will work for a particular jurisdiction. Details of the relevant ombudsman for your jurisdiction can be obtained from the RBI’s website.

The tokenisation of card payments is expected to make transactions more secure by adding an extra layer of security. Suppose an individual makes a purchase on an e-commerce website. He may provide his credit card number and other details. As an added precaution, he enters a one-time password (OTP) sent to his registered mobile number. One issue with the existing online payments mechanism is that it is susceptible to what is known as man-in-the-middle attacks. These attacks can be launched by someone who has access either to the customer's computer or to the e-commerce website's database. To avoid entering credit card details repeatedly, most frequent users store their details on the e-tailer's web site. If its database gets hacked, credit card details are stolen and are misused.

Once payments are tokenised, the buyer will not have to enter his credit card details at an e-commerce site. Instead, the system will generate a completely random number — the token — using an algorithm. It will be complex, unique, and almost impossible for anyone other than the payment processor to decipher.

How to get relief from ombudsman
  • Complain to your service provider first and then wait for 30 days
  • In case there’s no satisfactory response, write to the ombudsman
  • You have to approach the ombudsman within 13 months of filing the complaint
  • Ombudsman can award compensation for actual loss, or up to Rs 20 lakh, whichever is lower
  • If not satisfied with the ombudsman’s decision, approach the appellate authority
  • Final recourse is the consumer forum

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