Digital transactions have seen a significant jump in the last few years in India. The latest data by the Ministry of Electronics and IT showed that India clocked 3,270 crores of digital transactions between April and July 24, 2022. Whether online shopping, booking a flight ticket, transferring college fees, investing in mutual funds, or buying an insurance policy, the online payment system has quickly become the backbone of the Indian economy.
Quick adoption of the online payment system also increased the threats of online payment fraud and concerns related to people’s data security. With this backdrop, the RBI has taken several steps to protect the digital payment ecosystem and provide users with hassle-free services. Here are some of the recent steps the RBI has taken to make online payments safe and quick.
Adoption of Card Tokenization
Do you know how merchants use your card information when you make payments on their online platform? Several cases have been reported in the past where people lost their money when card information stored with the merchants was compromised after hacking incidents. Risks to online payment systems can be a roadblock for the entire digital payment system. People can’t trust online payment systems if there are risks to their data and chances of losing money. So, the RBI came up with a mandate to implement the tokenization of credit and debit cards.
Tokenization is the process of converting debit or credit card details into unique encrypted tokens. If you use a particular online shopping platform, you don’t have to worry when you save your card details. Merchants won’t be able to keep the card details, so it will enhance the security of your card. You can now transact quickly by tokenizing your card without any fear of losing your card information. Card tokenization is not mandatory, and the merchant can’t force the customers to save their cards while completing the transaction. If you have chosen not to tokenize your card, you’ll be required to enter the full card details whenever you want to transact through the same merchant’s platform.
Apart from tokenization, the RBI has also mandated adopting the new digital lending rule to safeguard customers’ interests.
Adhil Shetty, CEO, Bankbazaar.com, says, “The Indian fintech ecosystem is robust and the world’s best. It is growing with each passing day. Steps have been taken to make digital lending and online payments safe, secure, fast, convenient, and affordable. The government and the regulator’s initiatives such as Account Aggregator, Video KYC and DigiLocker have enabled growth and digital adoption at a scale that’s helping finance be more democratic and inclusive.”
New Digital Lending Rules
Digital lending has made it easier for people to shop online whether they have money in their pockets or not. Easy availability of funds may spoil the customers who can easily cross their spending limit. The RBI has introduced a new digital lending framework to protect customers from falling into a debt trap by getting forced to accept the enticing digital loan offer with the involvement of unethical third parties. Some third parties involved in digital lending risked the customer’s data and levied excessive charges on digital loans. Under the new digital lending rule, the RBI has been mandated to disclose all the charges in a loan to the borrower. All the loan-related transactions will now happen between the borrower’s bank account and the regulated entity while eliminating any role for the third parties.
All regulated entities must comply with the new digital lending rules. It will increase the trust of borrowers in the digital lending ecosystem. They can now use digital loans without fearing hidden charges and data theft.
Online payment thrives on safety, transparency, and convenience as some factors that also inculcate trust in the mind of the customers towards the digital payment ecosystem. The RBI consistently improves the customer’s online payment experience by promoting transparency, restricting involved entities from charging exorbitant charges and ensuring the customer’s data is handled with the utmost care.