Digital Transactions – Way of Life, Safe & Secure!

The Reserve Bank of India has released a certain set rules for payment aggregators and payment gateways to make digital payments safer for users. RBI Guidelines on the regulation of payment aggregators and payment gateways is aimed to reduce the risk of digital payment fraud and to keep users financial data safe.

The guidelines says that payment aggregators, such as Razorpay, CC Avenue, etc., would now have to avoid offering users the option of using ATM PIN to validate / complete online transactions. Payment over Rs 2000 users would only be allowed to use OTP for authentication purposes. Thus, ATM PIN of a individual would not be accessible online to the aggregator or payment gateway (or even the hacker) and thus would be safer.

Here are few measures took by RBI to keep your Digital life safer
online banking
Verification via ATM PIN for online transactions >2k- Mandatory & Not Optional

Payment aggregators can not request ATM PIN for online payment authentication, as per RBI notification,. Currently, some payment aggregators give the customer the option of using their ATM PIN to authenticate online payments. “All digital payments above Rs 2,000 will have to be authenticated on a one-time password (OTP) basis. However, according to RBI guidelines, the authentication of payments below Rs 2,000 through OTP is optional. The decision is taken to ensure that your ATM PIN is not available to anyone and that your card is safe.”

Refunds shall be made to original source of payment

RBI has also demanded payment aggregators to transfer the refund (made due to the  transaction cancellations) back to the customer’s account from which the initial payment was made.

Now, some e-commerce firms are automatically transfer refunds to the customer’s  ewallet (created on the company’s own platform) and not to the bank account , credit card etc. from which the original payment was done. User’s convenience is looked in as this amount can only be used for purchases on that site of e-commerce and nowhere else.

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Background check of merchants

RBI has asked payment aggregators to perform background checks of merchants.

The notification says, “Payment aggregators shall conduct merchants background check to ensure that these merchants have no malafide intent to deceive customers, do not sell fake / counterfeit / prohibited products, etc“. The website of the merchant shall state clearly the terms and conditions of the service and the time-line for processing returns and refunds.

 RBI is attempting to minimize the chances of fraud taking place in the name of reputed websites by asking payment aggregators to ensure that money debiting from the customer’s account is actually credited to the merchant’s account. In addition, customers need to informed during the time of payment that how long it will take to get the money back in case of a refund. This is to ensure that customer has clarity when to expect money in their account.

Online banking
Customer Grievance & Dispute Resolution

Payment aggregators will have to appoint a nodal officer to deal with customer complaints and grievances. Payment aggregators shall set up a formal, publicly disclosed customer grievance redress and dispute management framework, including the appointment of a nodal officer to deal with customer complaints / complaints and an escalating matrix. The complaint facility shall be clearly and easily accessible if it is made available on the website / mobile.

Further, Payment Aggregators shall have a dispute resolution mechanism binding on all participants, which shall include a transaction life cycle, a detailed explanation of the types of disputes, a process for dealing with them, compliance, responsibilities of all parties, documentation, reason codes, procedure for dealing with complaints, turn-around time for each stage, etc.

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5 changes to debit, credit card, online transactions from Mar’ 16

1. All debit and credit cards that have been newly issued or reissued as of 16 March 2020. It will only be made available for domestic transactions at ATMs and point of sale terminals.

2. Cardholders need to request the issuing bank to allow facilities such as online transactions and contactless transactions.

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3. Customer has to request the bank to allow international transactions for use his or her cards in international destinations,

4. In the event that a card has not been used for online transactions, international transactions and contactless transactions, the bank has the option to disable these options.

5. Banks will have the right to deactivate current card and reissue them on the basis of risk perception.

debit card transaction
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RBI moves to prevent misuse of bank funds

In an order to prevent misuse of bank funds, Reserve Bank of India has prohibited banks from routing funds into their current accounts from term loans borrowers have taken.

The decision is taken to stop firms and big borrowers from unfairly transferring funds from term loans via current accounts in other banks.

  • The RBI also banned banks from opening current accounts for clients who had used credit facilities from other banks in the form of cash credit (CC) or overdraft (OD).
  • Altogether, lender banks – mainly PSU banks – can now manage borrowers’ current accounts which, in turn, can’t redirect the money for other purposes from other banks’ current accounts, mostly private and international banks.
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Although term loans are intended for particular purposes, the funds should be transferred directly to the supplier of goods and services and expenses incurred by the borrower for day-to-day operations should be routed through a CC / OD account where the borrower has them, otherwise through a current account.The banks are free to open current accounts to prospective customers who have not taken advantage of any credit facilities from the banking system, according to the further instructions. In addition, the banks were instructed to regularly monitor all current accounts and CC / ODs, at least on a quarterly basis.

reserve bank of india

Meanwhile, considering the disruptions caused by the coronavirus pandemic, the RBI works in line with the government to provide all necessary support for infrastructure to improve demand in the economy.Although the central bank has slashed its repo rate by 250 basis points, it also took historic decisions such as external benchmarking of interest rates

During the last MPC meeting, the RBI maintained the status quo on interest rates despite the uncertainty encompassing inflation rates. However, the position as accommodative has still been maintained, which indicates that the RBI may continue to reduce the rate if necessary.

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