September 24, 2019

Penalty of Rs. 100 per day for not reversing e-payments on failed transactions

[ by Legal Era News Network ]


The Reserve Bank of India (RBI) has issued a notification on Turn Around Time (TAT) for resolution of customer complaints and compensation framework across all authorised payment systems. The Central Bank took a review of the expected turnaround time for resolution and customer compensation after a huge number of complaints because of unsuccessful or “failed” transactions.

The RBI applies the penalty to all failures not directly attributable to the customer which could be on account of various factors such as disruption of communication links, non-availability of cash in ATMs, time-out of sessions, non-credit to beneficiary’s account due to various causes, etc.

In a circular dated 20th September 2019, the RBI has stated that wherever financial compensation is involved, the same shall be effected to the customer’s account suo moto, without waiting for a complaint or claim from the customer. Customers who do not get the benefit of redress of the failure as defined in the TAT, can register a complaint to the Banking Ombudsman of Reserve Bank of India.

This directive has been issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect from October 15, 2019.

For ATMs and micro ATMS, the resolution will have to be within five days of the transaction failing which the Rs 100 per day penalty will apply. The duration is five days for point of sale (card swipe machine) transactions and online (card not present) payments too.

The Apex Bank further noted that penalty across transactions was not uniform, and RBI has decided to harmonize the same. Besides digital transactions, the RBI has also fixed timelines for non-digital transactions.

Banks and digital wallets will have to pay a stiff penalty of Rs. 100 per day if failed transactions are not reversed within a day. This will apply to most digital payments including unified payments interface (UPI), immediate payment system (IMPS), e-wallets, Aadhaar-enabled payment, card-to-card and transactions through National Automated-Clearing-House (NACH).

The Apex Bank further noted that penalty across transactions was not uniform and RBI has said that it has decided to harmonize the same.

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