Every failed transaction, fraud attempted or actually carried out, and complaint that is not satisfactorily addressed should be a cause of concern and must invite a detailed root cause analysis by Payment System Operators (PSOs), according to RBI Governor Shaktikanta Das.

Das emphasised that PSOs would do well to remember that like the batsman on the cricket field, they are only as good as the last ball faced

He observed that payments and settlements are serious businesses with potential downsides, should anything go wrong.

“Our effort should be to mitigate such downsides and capitalise on the upsides. This is something all market participants must recognise and constantly remind themselves,” he said at a Conference of PSOs in Kochi on Saturday.

PSOs in India include Clearing Corporation of India, National Payments Corporation of India, Cards Payment Networks, Cross border Money Transfer, ATM networks, Prepaid Payment Instruments, White Label ATM Operators, Instant Money Transfer, and Trade Receivables Discounting System, Bharat Bill Payment System.

Ensuring public trust

The Governor asked the PSOs to embrace Online Dispute Resolution (ODR) system conceived by RBI.

“While there is wide appreciation of the Online Dispute Resolution (ODR) system conceived by RBI, how many PSOs have actually enabled it?

“Should not the entities embrace such initiatives upfront and enhance customer satisfaction? Afterall, PSOs deal with public money,” Das said.

The Governor underscored that availability and affordability of an expeditious grievance redress mechanism is of utmost importance to ensure public trust in digital payments.

“While traditional bank branch model offers a physical place where customers can lodge their grievances, the same may not be the case in digital payments where users sometimes find it difficult to ascertain the appropriate forum for lodging their grievances.

“More the struggle undertaken by people in resolving their grievances, more unlikely it becomes that they would attempt digital payments in future,” Das said.

Addressing greivances

The Governor opined that prompt reconciliation of transactions by PSOs is an easy and expeditious method of addressing customer grievances.

He suggested that latest technologies may also be leveraged to support rule-based resolution of grievances with zero to minimal manual intervention.

The Governor said for long term success, the PSOs should specifically focus on:

  1. Ensuring good governance and prudent risk management
  2. Maintaining robust IT infrastructure with cyber resilience
  3. Putting in place responsive grievance redress mechanism.

He suggested that efforts may also be made for ensuring wider participation in the framework for offline payments. PSOs may also work on the formation of Self-Regulatory Organisations (SROs) for the greater good of all stakeholders.

Emerging threats

Das said an increase in digital payments and users also brings to the fore potential risks pertaining to cyber security, data privacy and operational resilience.

So, PSOs must always be cognisant of the emerging threats and put in place suitable risk mitigation measures.

“A related area that requires focus is outsourcing arrangements of PSOs with their vendors. Service-level agreements with vendors should meet minimum standards prescribed by the Reserve Bank.

“In all such agreements, PSOs’ right to conduct audit of the service provider must always be ensured,” the Governor said.