RBI Proposes Delay in Digital Payments to Combat Fraud
Introduction to Digital Payment Trends
In recent years, India has witnessed a remarkable surge in digital payments, marking a significant transformation in how financial transactions are executed by both individuals and businesses. However, this rapid growth has also led to an increase in sophisticated fraudulent schemes targeting users. In response, the Reserve Bank of India (RBI) has put forth a discussion paper suggesting a new regulation that would impose a delay of several hours on specific transactions to help mitigate digital fraud. The immediate nature of transactions through platforms like NEFT, RTGS, UPI, and IMPS limits the ability to intervene quickly and recover funds.
Details of RBI's Proposal
What RBI has proposed?
The RBI's proposal indicates that transactions could experience a delay of up to one hour. Given the limited options for recovering funds after a fraudulent transaction, victims often find themselves with few choices and uncertain results, which can be lengthy and yield low recovery rates. To maintain the seamless nature of low-value transactions, the RBI has suggested that this delay mechanism should only apply to APP transactions exceeding a certain limit. A threshold of ₹10,000 per transaction is being considered, as transactions above this amount represent about 45% of reported fraud cases by volume and a staggering 98.5% by value, according to the National Cyber Crime Reporting Portal (NCRP).
Under this framework, if a customer initiates a transaction that exceeds ₹10,000, a one-hour delay could be enforced. This lag could be implemented either at the payer's end, the payee's end, or both. For ease of implementation, it is recommended that the delay be applied solely at the payer's end.
Expert Opinions on the Proposal
What experts said on the proposal?
In a discussion with a media channel, Amit Relan, CEO and co-founder of mFilterIt, expressed that the introduction of a one-hour cooling-off period for certain UPI transactions is a positive move. However, he emphasized that a last-minute safeguard cannot solely determine the future of fraud prevention. He stated, "True trust must be established much earlier in the process, from account creation to onboarding and at the first sign of suspicious activity. The industry needs to shift from reactive measures to proactive intelligence." He also noted that transactions are now validated in real-time using AI-driven risk assessments, behavioral signals, device intelligence, and intent analysis. The platforms that will thrive in the next phase of digital payment growth will be those that seamlessly integrate trust into the user experience.
Amit Kumar, CTO and Director of Easebuzz, pointed out that the current challenge lies more in human vulnerability than in technology. He remarked, "Implementing a brief cooling-off period aligns with the critical golden hour principle in fraud and risk management, providing both users and institutions with a crucial window to detect, reassess, and halt fraudulent transfers before funds are irrevocably moved." He acknowledged that while this may introduce some initial friction for legitimate users, smarter technologies will eventually facilitate convenience with the necessary safeguards. The overarching goal is to transition from blind speed to informed speed, where trust, rather than mere convenience, forms the foundation of future digital payments.
Prakash Ravindran, Co-Founder and CEO of InstiFi, added, "India has developed one of the fastest digital payment ecosystems globally, but this speed has introduced new risks. Most fraud occurs not due to system failures but because individuals are pressured or misled into transferring money. A one-hour window may seem brief, but it allows for a moment to pause, reflect, and verify, which can often be sufficient to avert a loss."