In response to the escalating instances of digital financial theft, the Reserve Bank of India (RBI) is contemplating the implementation of a time lag for authorized push payments (APP) transfers. This measure would affect transactions at both the payer and payee ends, serving as a fraud-mitigation strategy.
The RBI’s discussion paper, titled ‘Exploring safeguards in digital payments to curb frauds,’ proposes several measures aimed at controlling and reducing the potential for financial fraud. The paper is open for public comments and feedback until May 8.
One key suggestion from the apex bank is to introduce a one-hour delay for processing digital transactions valued at ₹10,000 or more. This delay would apply to all merchant transactions conducted via UPI, cards, net banking, and other digital methods. Recurring payments, such as e-mandates, and payments made using checks, are proposed to be exempt from this delay.
The RBI anticipates that this delay would act as a preventive control, disrupting a fraudster’s psychological influence over the victim and providing the payer with an opportunity to reconsider the transaction.
Acknowledging that some transactions are time-sensitive, the RBI is considering an option for payers to override the delay for specific transactions. This could be achieved through explicit authorization, such as a whitelisting mechanism. In such cases, the delay could be bypassed.
In addition to whitelisting transactions, the RBI is also considering allowing payers to whitelist payees, exempting all payments to these trusted recipients from the time lag.
For APP transactions of ₹50,000 and above, the central bank has suggested a 24-hour delay period for processing transactions involving citizens aged 70 years and above, as well as other vulnerable individuals. These customers could appoint a trusted person to oversee these types of transactions.
The RBI noted that nearly 92% of the value of reported frauds in the National Cybercrime Reporting Portal (NCRP) involve individuals in this age group. The proposed measures aim to balance operational efficiency for smaller transactions with robust protection for larger-value transfers.
With the longer waiting period, banks would be required to clearly explain the associated risks to customers before processing such requests, ensuring informed decision-making.
For businesses, the RBI is considering setting a ceiling of ₹25 Lakh for annual aggregate credits into a bank account, beyond which additional proof supporting the genuine requirement for higher aggregate credit would be required from the customer.
These measures, if implemented, would complement the central bank’s efforts to safeguard the digital payments ecosystem. In March, the RBI released draft guidelines for a compensation scheme to protect consumers from digital fraud, where affected customers could be reimbursed up to 85% of their lost amount, or ₹25,000, whichever is lower.
Prior to that, RBI governor Sanjay Malhotra revealed that the central bank is developing an AI-powered fraud detection platform to flag suspicious online transactions.
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