The Reserve Bank of India (RBI) mandating stricter regulations and controls from 1st October 2021 is welcome. With online platforms becoming available only on periodic digital payments based on pre-stored data relating to cards (debit/credit/prepaid) gleaned from payment gateways, those hooked to these platforms unthinkingly give their consent to recurring payments vide the same mode, little realizing that they might later on either become disenchanted with the platform or find a more satisfying source of entertainment or time-pass or might have simply changed their bank itself.
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For the app/website of course this arrangement is convenient as it is at once conducive to customer retention besides being cost-effective as well in terms of follow-up expenses but RBI has rightly chosen to take up cudgels for customers rather than for the better endowed online platforms. Short of the formal and peremptory ban, it has imposed restraints and restrictions that while being welcome are unwholesome.
Notification vide email or SMS 24 hours prior to renewal deadline has been mandated but that is not enough as amounts up to Rs 5000 can still go through even under the new regime unless the customer proactively reduces this upper limit herself. While consumer awareness is ideal and desirable, RBI should not leave her to stew in her own juice. Additional factor authentication (AFA) mandated for standing instructions of payments larger than Rs 5000 should have been mandated irrespective of the amount. If that would virtually amount to the abolition of the auto-debit facility itself, so be it.
Standing instructions independent of card data are a different kettle of fish as it results from a tripartite agreement consciously and carefully drawn. To wit, home loan companies, do not disburse loans sans ECS pursuant to which the borrower instructs his bank to auto-debit EMI. In the case of recurring payments, there is no such standing instruction. It is just card companies like Visa and MasterCard happily playing ball with the online platforms exposing in the process consumers to the possibility of unnecessary payments.
In the ultimate analysis, only net-banking payment seems to be foolproof as AFA is its necessary and unavoidable adjunct. The RBI should forthwith abolish the tap cards which customers flash as a badge of honor little realizing that should such cards get into wrong hands, the larcenist would happily tap his way out of many merchant establishments till the loss of the card is notified and the card is deactivated. It was launched in India at the height of Covid last year, touting it as a contactless and touch-free and hassle-free payment but one should not consider entering PIN a hassle.
Talking of PIN it is high time ATM withdrawals were hemmed in by AFA—OTP. A person can lose his card but the chances of she losing both her card and cell at the same time are remote. Therefore misuse of her card at the ATM would come to light when she receives OTP for the card whose loss she is grieving. To be sure, ATM withdrawals are subject to PIN protection but given the possibility of crooks gleaning all related details, AFA would halt the marauders on their tracks.
Vaccine hesitancy is quite widespread not only among the illiterate segments but also among the highly educated people in the US. Likewise, the phenomenon of tech-hesitancy insofar as do-it-yourself banking is concerned is not just an aberration but quite widespread.
For what explains people standing in queues to withdraw from post office savings accounts eschewing ATMs? Banks also have die-hard and inveterate account holders queuing up for withdrawing at their teller counters presenting self-cheques once again looking askance at the ATM just a few feet away. AFA would serve in winning over such skeptics and Luddites.
—S. Murlidharan is a CA by qualification and writes on economic issues, fiscal and commercial laws. The views expressed in the article are his own
Read his other columns here
(Edited by : Ajay Vaishnav)
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