Security Concerns Prompt RBI Considerations

As India’s leading instant payments system gains traction, fraud cases are on the rise, prompting the Reserve Bank of India (RBI) to explore measures that could slow down transactions for enhanced security.

The proposed changes include a one-hour delay for peer-to-peer (P2P) transactions over 10,000 rupees ($100), with an emphasis on addressing authorized push payment (APP) fraud. This type of fraud involves users unwittingly transferring money to fraudsters through false representations.

Experts highlight that the delay could be crucial in investigating suspicious transactions and preventing social engineering tactics. It also gives consumers time to reconsider, reducing the risk associated with impulsive transfers.

Additional Security Measures

Furthermore, RBI is suggesting additional authentication layers for transactions over 50,000 rupees. This might include verifying through a trusted contact before proceeding. Some bank accounts may also face incoming funds restrictions unless they pass further scrutiny.

The move aims to target a significant portion of fraud linked to the United Payments Interface (UPI), which handles most real-time transactions in India. While retail UPI transactions have seen substantial growth, these security measures are designed to protect against increasing fraudulent activities.

Previous Fraud Combat Efforts

RBI’s efforts to combat APP fraud aren’t new. Last year, the regulator introduced measures such as biometric authentication, often tied to Aadhaar, India’s national digital identity system.

Globally, other platforms like JPMorgan Chase’s Zelle have implemented similar safeguards, including canceling high-risk payments based on social media indicators of suspected scam activity.