For many Indians, the act of sending money instantly using UPI has become a common practice. However, this rapid transfer process might soon undergo a change. The Reserve Bank of India (RBI) is contemplating a measure that could introduce a one-hour delay for certain high-value digital transactions to combat the increasing instances of online fraud.
The concept behind this proposal is straightforward: to provide users with a brief timeframe to halt a transaction if they suspect any fraudulent activity.
OPERATION OF THE PROPOSED DELAY
As per the proposal, transfers between accounts exceeding Rs 10,000, particularly via UPI, may no longer occur instantaneously. Instead, there could be a one-hour waiting period before the recipient receives the funds.
During this interval, the funds will be debited from the sender’s account but temporarily withheld. This grace period is designed to enable users to cancel the transaction if they suspect fraudulent activity or realize an error.
Banks will utilize this time to conduct background checks. If a transaction appears suspicious, such as transferring a substantial amount to a new account, the user might receive an alert requesting confirmation for the payment.
If any irregularities are detected by the bank, it may withhold processing the transaction until the sender confirms it again.
MOTIVATION BEHIND RBI’S CONSIDERATION
The primary concern of the central bank stems from the significant surge in digital fraud cases, particularly instances where users are coerced into authorizing payments themselves.
According to the RBI, transactions exceeding Rs 10,000 contribute to approximately 45% of fraud incidents by volume, yet result in almost 98.5% of the total monetary losses. This highlights higher-value transactions as a critical vulnerability.
By incorporating a delay, the RBI aims to introduce an additional security layer while minimizing disruption to the convenience of digital payments.
ENHANCED SAFEGUARDS FOR VULNERABLE USERS
The proposal also emphasizes safeguarding individuals who are more susceptible to scams.
For customers aged 70 and above, as well as individuals with disabilities, the RBI has proposed an additional verification step for high-value transfers exceeding Rs 50,000. Such transactions may necessitate approval from a “trusted individual.”
This measure is intended to reduce losses from social engineering scams, where fraudsters manipulate users into initiating money transfers themselves.
Simultaneously, users will have the choice to opt out of this regulation, albeit with potential waiting periods and risk alerts before doing so.
IMPACT ON REGULAR PAYMENTS
The RBI aims to ensure that everyday transactions continue unhindered. Payments to vendors, recurring payments like EMIs or subscriptions, and check payments are expected to remain exempt from the delay mechanism.
Users may also have the option to designate trusted recipients for seamless transfers without any waiting period