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Reserve Bank of India launches digital payment security project

The Reserve Bank of India has said it plans to secure online payment processes, a step toward preventing and reducing fraud. It announced its new measures to secure digital payment channels via the proposed Digital Payment Security Controls Directions, 2020.

The project is for regulated entities to set up a robust governance structure for systems and to implement common minimum standards of security controls for channels like the Internet, mobile banking, and card payments, among others.

A statement released by the organisation noted that while the guidelines will be technology and platform agnostic, it will create an enhanced and enabling environment for customers to use digital payment products more safely and securely.

The RBI Governor, Shaktikanta Das, explained that the directions will contain requirements for strong governance, implementation, and monitoring of certain minimum standards on common security controls.

Furthermore, to strengthen and improve the efficacy of the internal grievance redress mechanism of the banks and to provide better customer service, RBI has decided to put in place a comprehensive framework comprising inter-alia of enhanced disclosures on customer complaints by banks. Also, a monetary disincentive in the form of recovery of the cost of redress of complaints from banks when maintainable complaints are comparatively high.

It will also undertake intensive reviews of grievance redress mechanisms and supervisory action against banks that fail to improve their redress mechanism in a time-bound manner.

According to a media report, RBI has also announced a hike in the upper limit of contactless card payments from IN₹ 2,000 (about US$27) to IN₹ 5,000 (about US$67) from January 2021 and will make RTGS transactions available round-the-clock.

India’s digital payments have grown exponentially after the strict nationwide lockdown in the first quarter of the current fiscal year 2020-21. During the fiscal’s second quarter, UPI payments recorded an 82% increase in volume and a 99% jump in value, compared with the same quarter last year, according to the Worldline India Digital Payments report. In September 2020, UPI had more than 1.8 billion transactions in volume.

In the second quarter, 19 banks joined the UPI ecosystem, bringing the total number of banks providing UPI services to 174 while the National Payments Corporation of India (NPCI) BHIM App was available for customers of 146 banks.

The initiatives by the RBI are welcomed by industry players as it is expected to leverage technology, spur innovation, enhance system efficiency, and strengthen the acceptance infrastructure, Deepak Chandnani, Managing Director, Worldline South Asia & Middle East said. While contactless, faceless, and cashless transactions are becoming the preferred choice among consumers and merchants, it is important to note that this trend started pre-COVID and is now accelerating.

Meanwhile, in the quarter ending-September 2020, there were approximately 5.1 million POS terminals deployed by merchant acquiring banks, which is 13% higher than the same quarter of the previous year. Among these, private sector banks represent about 69% of the POS terminal market while public sector banks account for 26%. Payments banks accounted for 4% of the market share and foreign banks represent the rest 1%.

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