RBI proposes extending ‘switch on/off’ feature to all digital payment modes

The Reserve Bank of India (RBI) has reportedly proposed a set of measures to strengthen digital payment security under its Payments Vision 2028 framework, including a shared liability model for unauthorised transactions and expansion of user-controlled features.

Under the proposed framework, the responsibility for unauthorised digital transactions will be shared between customers and beneficiary banks, instead of being borne solely by either party at present.

The move is aimed at improving fraud detection, strengthening inter-bank coordination and enhancing user confidence in the digital payments ecosystem, the central bank said.

At present, the ‘switch on/off’ facility is available only for card transactions. The RBI has proposed to extend this feature across all digital payment modes, including mobile wallets, UPI and net banking.

This will enable customers to enable or disable transaction capabilities as per their requirement, thereby offering greater control over their accounts and reducing the risk of fraud.

The proposed feature will also allow users to restrict transactions for specific use cases such as international payments or for defined time periods, making it particularly useful in preventing misuse.

The shared liability framework is expected to encourage banks to develop stronger fraud detection systems, while improved coordination among banks is likely to ensure quicker response and prevention of fraudulent transactions.

Experts said the move assumes significance in the backdrop of rising incidents of fraud, including those involving misuse of one-time passwords (OTPs), and will ensure accountability across all parties involved in a transaction.