In an effort to combat the increasing incidents of online payment fraud, the government is contemplating the introduction of a minimum time frame for transactions exceeding a specified amount between two individuals. This potential initiative involves implementing a four-hour window for the first transaction between two users for digital payments, particularly those exceeding Rs 2,000, according to government officials cited by The Indian Express.
Although this measure may introduce some friction to digital payments, officials argue that it is essential to address cybersecurity concerns. If approved, the proposal could encompass various digital payment methods, including Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and the Unified Payments Interface (UPI).
Enhancing Digital Payment Security: Proposed Measures for Regulating Initial Transactions
It’s important to note that the intention is not solely to delay or restrict the first transaction upon account creation, as is already common in many digital payment platforms. Instead, the aim is to regulate every initial transaction between two users, regardless of their individual transaction history. For instance, the current practice allows a user creating a new UPI account to send a maximum of Rs 5,000 in the first 24 hours, while in the case of National Electronic Funds Transfer (NEFT), post activation of a beneficiary, up to Rs 50,000 can be transferred in the initial 24 hours.
Under the proposed plan, a four-hour time limit would apply each time a user makes their first payment exceeding Rs 2,000 to another user with whom they have never transacted before. The government official mentioned that discussions on this matter are scheduled for a meeting with various stakeholders, including the Reserve Bank of India, public and private sector banks, and technology companies like Google and Razorpay.
Combatting the Surge in Digital Payment Frauds: Insights from RBI’s Annual Report and the Path Ahead
According to the RBI Annual Report 2022-23, banks witnessed the highest number of frauds in the digital payment category during the financial year 2022-23. In FY2023, the total number of fraud cases in the banking system reached 13,530, involving a total amount of Rs 30,252 crore, with nearly 49% occurring in the digital payment category. The proposal to introduce a time limit for first-time digital transactions over Rs 2,000 aims to address these concerns, particularly after recent incidents like the one involving UCO Bank, where technical issues led to a credit of Rs 820 crore via IMPS.
On November 28, the Department of Financial Services under the Union Finance Ministry is set to lead a meeting with government and private stakeholders to discuss digital payment frauds, financial crimes, and cybersecurity measures.