RBI Considers Delaying Large Digital Payments to Fight Fraud

The Reserve Bank of India (RBI) is considering implementing a time delay for authorized push payments (APP) to mitigate the increasing incidence of digital financial theft. According to a recent discussion paper, the RBI proposes a one-hour delay for processing digital transactions of ₹10,000 or more across platforms like UPI, cards, and net banking. Recurring payments and cheque transactions would be exempt.

The RBI’s discussion paper, titled ‘Exploring safeguards in digital payments to curb frauds,’ is open for public comment until May 8. The proposed delay aims to disrupt fraudsters’ psychological influence over victims, providing payers an opportunity to reconsider transactions.

To address time-sensitive transactions, the RBI suggests an override option, allowing payers to authorize specific transactions or whitelist payees, bypassing the delay. For transactions above ₹50,000 involving citizens aged 70 and above, a 24-hour delay is proposed, with the option for an additional authenticator.

The RBI notes that nearly 92% of reported fraud value originates from individuals in this age group. The central bank is also considering setting a ₹25 lakh ceiling for annual aggregate credits into business bank accounts without additional verification.

These measures complement the RBI’s ongoing efforts to enhance digital payment security. In March, the RBI released draft guidelines for a compensation scheme to protect consumers from digital fraud, potentially reimbursing up to 85% of lost amounts, capped at ₹25,000. Additionally, the RBI is developing an AI-powered fraud detection platform to identify suspicious online transactions.