Dear RBI, don’t make digital payments difficult for consumers

Economic Times,September 20, 2021

By Pradeep S. Mehta,

The Reserve Bank of India has been on the forefront for facilitating a broad-based financial restoration from the pandemic. Because the RBI would have famous, whereas there are indicators of revival, we aren’t but out of the woods. The pandemic has accelerated the push in the direction of digitalisation, with higher adoption of digital payments, which may act as a lever for ‘inclusive’ and ‘equitable’ growth, which has been so astutely articulated as RBI’s imaginative and prescient.

India is racing in the direction of reaching the purpose of recording digital transactions value Rs 7 lakh crore by 2025, powered by computerized recurring funds of utility, schooling, financial savings, funding, meals and beverage, e-commerce, and different subscription companies. These kind the bedrock of unlocking the chance to democratise credit score, insurance coverage, wealth administration and different monetary companies, and design customised merchandise to successfully serve the poorest.

Sadly, some current actions by the RBI might pose hurdles in reaching the imaginative and prescient. As an illustration, its round on processing of e-mandates for recurring transactions prohibits continuation of frictionless e-mandates from modes like debit playing cards, from October 2021, until the situations supplied within the round are met by the stakeholders, primarily banks.

In a rustic with greater than 97 crore playing cards, and approaching 1.5 crore card transactions each day, value Rs 4,000 crore, this will create large and unimaginable inconvenience to shoppers. Thoughts you, many card customers had been pushed into the digital ecosystem in the course of the pandemic, and could also be as soon as bitten twice shy ought to their on-line expertise not encourage confidence.

Whereas the RBI acknowledged the potential for such large-scale disruptions, it has sadly not reached out to shoppers and shopper teams with a plan to handle such a state of affairs. It has been estimated that month-to-month transactions value Rs 2,000 crore might be adversely impacted if prohibition comes into power.

Non-consideration of shoppers’ standpoint is shocking because the RBI is globally reputed to perform very effectively in shopper curiosity. The RBI has turn out to be rather more forthcoming in inviting feedback from public on draft notifications and studies. We’d urge Shaktikanta Das, the RBI Governor to urgently look into this matter and set up strong processes inside the regulator to often interact with shopper teams and contemplate shoppers’ perspective whereas taking selections impacting shoppers at giant.

On account of the round, most of us are receiving messages from service suppliers that our e-mandates for recurring transactions shall be discontinued from subsequent month. Alas, no readability exists on steps that customers are required to take to proceed to profit from companies by making certain seamless funds earlier than the due date, and avoiding penalties or discontinuation.

 Many service suppliers are additionally shifting away from short-term month-to-month plans/packs to extra long-term ones and consequently rising their costs. Such strikes, a direct results of the round, might disproportionately influence low revenue shoppers, by making companies prohibitively costly, and be antithetical to Mr Das’s imaginative and prescient of inclusive and equitable restoration.

Clearly, the RBI has the correct intent i.e. providing protected and safe fee expertise to shoppers. Nonetheless, security can’t and shouldn’t come at the price of comfort and limiting shopper alternative. The regulator must keep away from a top-down strategy and intently work with stakeholders, banks, fintech, retailers, shoppers, and intermediaries, to make sure transition to a safer in addition to shopper pleasant digital expertise.

In case computerized card-based recurring funds are discontinued, there isn’t a assure that customers will shift to different modes (like UPI or web banking) and never take help from third events/brokers to proceed to make card-based funds, which can expose them to safety, privateness, and monetary dangers. No consciousness era and capability constructing initiatives have been deliberate by the regulator, in session with shopper teams, to assist shoppers in choosing acceptable digital fee modes.

Furthermore, nudging shoppers to decide on one supplier over one other not solely distorts competitors and makes the taking part in subject uneven, however may additionally hurt the digital fee ecosystem in the long run.

As well as, the regulator has adopted a one-size-fits-all strategy by mandating further issue authentication for funds past Rs 5,000. This not solely disempowers shoppers, but in addition robs them of a possibility to take knowledgeable selections to handle dangers referring to digital transactions.

Consequently, the RBI, regardless of proper intent, ought to keep away from making selections on behalf of shoppers, and permit them alternative and actual company. Shoppers must be free to decide on the modes of constructing digital funds, the quantity which they’re comfy in transacting with out further issue authentication, and whether or not to securely retailer card particulars with retailers or not.

The regulator must be involved with selling ample alternative for shoppers, facilitating innovation in the direction of safe and seamless shopper expertise, and making certain well timed redress of shopper grievances.

To its credit score, the RBI is certainly pushing business to innovate and has just lately permitted card on file (CoF) tokenisation. This occurred after a powerful pushback by stakeholders, together with shoppers, in opposition to the regulatory prohibition to retailer card particulars with retailers.

As Mr Das would respect, it shouldn’t have come to this, significantly at a time when all stakeholders are anticipated to work collectively to make sure strong restoration from the pandemic. We, the shoppers, business and regulators, are on this collectively, and share a typical imaginative and prescient of inclusive and equitable digital society. We’re able to play our half, and sincerely hope that Mr Das will too!!

The writer is Secretary-General, CUTS Worldwide. Prince Gupta and Amol Kulkarni of CUTS contributed to the article.

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