From trusted persons to kill switch: 6 ways how RBI is planning to safeguard your online payments

Since many Indians now depend on digital payments for their expenses on a daily basis, both users and regulators are becoming increasingly concerned about the surge in online fraud.

In the same vein, the Reserve Bank of India (RBI) has released a discussion paper on digital payment security. The paper titled “Exploring safeguards in digital payments to curb frauds’ outlines several measures designed to prevent fraud, reduce financial losses and give customers more control over their accounts.

Here are the six key points from the RBI’s discussion paper on digital payment security.

1. One hour wait period for new payees and high-value transfers

Any payment of more than Rs 10,000 to a newly added beneficiary ay be delayed by up to one hour. This time frame is designed to allow customers to analyse the transaction and cancel it if they suspect fraud.
The RBI has also suggested that users may be allowed to whitelist trusted beneficiaries, enabling instant transfers to frequently used contacts without delay.

2. Additional authentication by trusted person for high-value digital transactions by vulnerable sections of society

The RBI proposal has also suggested introducing a ‘trusted person’ approval system for users aged 70 years and above and differently-abled persons (persons with disabilities). Under this system, transfers exceeding Rs 50,000 may require confirmation from a nominated trusted individual before the transaction is processed.

However, any change in the trusted person to be allowed is only after a cooling period of 24 hours.

3. ‘Kill switch’ to block all digital payments

The RBI has recommended implementing an emergency 'kill switch' function, which would allow clients to immediately halt all outgoing digital transactions.

Under this option, customers can instantly lock their online banking account via a mobile app or hotline and, thereby, disable fund transfers, digital banking access and payment functions.

Kill Switch can be used in cases such as fraud suspicion, phone misplaced or lost. The switch can disable all UPI, online banking and card-based transactions.

4. Steps to curb mule accounts

It has been observed that fraudsters frequently use mule accounts, which are accounts created in the names of gullible people. Fraudsters are deploying various tactics, such as bogus call centres, deepfake-driven impersonation scams and mule account networks. The RBI has suggested implementing improved monitoring mechanisms to remedy this.

5. Digital payment features may be disabled by default for new accounts

To reduce fraud risks at the account-opening stage, the RBI has proposed that digital payment features such as UPI or internet banking may be disabled by default for newly opened accounts. By limiting access during the early phase, regulators hope to reduce the creation of accounts used solely for fraudulent activities.

6. Customer awareness and reporting mechanisms

The RBI has emphasised the need to improve customer awareness and reporting systems.
Banks and payment service providers may be required to provide clearer fraud alerts, faster reporting channels and more visible warnings about suspicious transactions.