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August 8, 2020

Having Dispute Regarding Digital Payments? Know how RBI can help with Online Dispute Resolution

by Rubina Dsouza in RBI

Having Dispute Regarding Digital Payments? Know how RBI can help with Online Dispute Resolution


In a major development for digital payment services, the Reserve Bank of India (RBI) has decided that payment system operators (PSOs) will have to implement online dispute resolution (ODR) systems in a phased manner.

In the second bi-monthly monetary policy statement announced on Thursday (dated 06.08.2020), the RBI Governor said that a scheme of retail payments in offline mode using cards and mobile devices, and a system of  online dispute resolution (ODR) mechanism for resolving customer disputes and grievances pertaining to digital payments will be introduced. The mechanism will be system-driven and rule-based with zero or minimal manual intervention.

In sync with Payment Vision 2021

  1. The Payment Systems Vision 2021 with its core theme of ‘Empowering Exceptional (E) payment Experience’ aims at empowering every Indian with access to a bouquet of e-payment options that is safe, secure, convenient, quick and affordable.
  2. The Payment Systems Vision 2021 had been formalised based on inputs from various stakeholders and guidance of the Board for Payment and Settlement Systems (BPSS).
  3. It envisages to achieve a ‘highly digital’ and ‘cash-lite’ society through the goal posts of Competition, Cost effectiveness, Convenience and Confidence (4Cs).
  4. As the number of digital transactions rise significantly, there is an accompanying increase in the number of disputes and grievances.
  5. As a step in this direction, authorised Payment System Operators (PSOs) – banks and non-banks – and their participants were advised to put in place system/s for ODR for resolving disputes and grievances of customers.

How will the Online Dispute Resolution (ODR) mechanism work?

  1. To begin with, authorised PSOs shall be required to implement ODR systems for disputes and grievances related to failed transactions in their respective payment systems by January 2021.
  2. The PSOs shall provide access to such a system to its participating members i.e., Payment System Participants (PSPs).
  3. Any entity setting up a payment system in India thereafter or participating therein, shall make available the ODR system at the commencement of its operations.
  4. Based on the experience gained, ODR arrangements will be extended to other types of disputes and grievances (other than those related to failed transactions).
  5. If the grievance remains unresolved up to one month, the customer may approach the respective ombudsman.

What is the Procedure for Lodging and tracking of disputes and grievances?

  1. Customers shall be provided with one or more channels – web-based or paper-based complaint form, IVR, mobile application, call centre, SMS, through branches or offices, etc. – for lodging disputes and grievances.
  2. Such facility shall be provided by the PSO as well as by the PSP (the issuer institutions with whom the customer has a relationship) with a mechanism to link / access the ODR system put in place by the PSO. The industry may progressively increase the variety of these channels.
  3. In addition to the above channels, in case of mobile phone-based systems like Unified Payments Interface (UPI), third party app providers (TPAPs) shall also provide customers with a facility to lodge disputes and grievances through the same mobile app used for making payments, which shall be integrated with the ODR system.
  4. The process of lodging the dispute or grievance shall be simple and involve only necessary minimum details.
  5. The ODR system should be made capable of automatically fetching full details based on the information provided by the customer. The aspect of data confidentiality shall specifically be taken care of while designing such parameters.
  6. Once a customer has lodged the dispute or grievance, a unique reference number shall be allocated by the ODR system.
  7. Facility shall be provided to the customers for tracking the status of the dispute or grievance using this reference number.

RBI has also proposed to allow a pilot scheme for small value payments in off-line mode with built-in features for safeguarding interest of users, liability protection, among others. It noted that there has been considerable growth in digital payments using mobile phones, cards, wallets, etc.

However, lack of Internet connectivity or low speed of Internet, especially in remote areas, is a major impediment in adoption of digital payments. Against this backdrop, providing an option of off-line payments through cards, wallets and mobile devices is expected to further the adoption of digital payments. RBI has been encouraging entities to develop off-line payment solutions. Based on experience gained, detailed guidelines for roll-out of the scheme will be announced in due course.

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