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India’s Central Bank Hosts Hackathon for Digital Payment Solutions

The country’s central bank, the Reserve Bank of India (RBI), has announced its first global hackathon on digital payments, aiming to make them safer by fostering solutions to overcome the present limitations of mobile phones and one-time passwords (OTPs). This is the first edition of the hackathon, titled HaRBInger 2021- Innovation for Transformation. It is themed ‘Smarter Digital Payments’. It will identify and develop solutions that have the potential to make digital payments accessible to the under-served, enhance the ease of payments and user experiences, strengthen security, and promote customer protection.

Participants in the challenge, which is open to all over 18 years, have an opportunity to earn IN₹4 million (US$53,742) if they win and IN₹2 million (US$26,871) if they come in second. The contestants can provide the following solutions:

  • Innovative, easy-to-use, non-mobile digital payment solutions for converting small-ticket cash transactions to a digital mode
  • Context-based retail payments to remove the physical act of payment while transacting in-store
  • Alternative solutions to OTP and PIN to authenticate digital payments
  • A social media analysis monitoring tool for the detection of digital payment fraud and disruption

According to a press release by RBI, the hackathon will be hosted on the Application Programming Interface Exchange (APIX) platform. Participants can register online through the link provided on the RBI’s website, the last date to apply is 15 November. The bank explained that it aims to sustain the growth in online payments and ensure a shift in customer behaviour towards a less cash-dependent society by creating a robust, convenient, accessible, low-cost, and secure digital payment and settlement ecosystem.

For an inclusive environment, non-mobile, swift, and easy-to-use innovative solutions to convert small value cash payments of less than IN₹100 (US$1.34) to digital mode, needs to be explored. This will enhance the reach of digital payments and enable greater inclusion. The release added that context-based retail payments are aimed at removing the physical act of payment from the payment experience. They would require no direct interaction between the customer and the merchant. This is generally contingent on the completion of an underlying activity and could include automatic payments at grocery stores once a customer leaves.

The solutions may also focus on consent mechanisms, fraud prevention, and security features. The search for alternatives to PIN and OTPs is driven by the fact that these are received by the remitter over their mobile phone, while the SMS through which the OTP is received is not an encrypted secure messaging system. There have been instances of digital payment frauds where customers are tricked into sharing the OTP. As such, an alternate, smart authentication mechanism may result in more secure digital transactions. Given that customers are now voicing their concerns, largely on social media, the analysis of consumer complaints and concerns could enable digital payment operators and regulators to take prompt action to protect consumers and reduce fraud.

A hackathon is an event organised to bring together people and entities to develop innovative solutions for existing challenges in the specified areas through problem statements. The problem statements are worked upon by the participants, who include but are not limited to, individuals, teams, and members of hardware, software, and coding communities. During the event, participants submit ideas, create solutions, and exhibit prototypes, which is then judged by a panel.

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