Millennium Post

RBI to the rescue

Arjavi Indraneesh discusses RBI’s TAT mechanism and compensation in the wake of increasing transaction failures and resulting adversity on customer’s account

It would be hard to spot even one person who hasn't had a bad experience with an ATM transaction, payment at the point of sale (PoS) machine or online payment. There are frequent incidents where while withdrawing cash from an ATM, the message from the bank arrives on the phone informing that money has been deducted from the account but no cash comes out of the ATM.

Another frequent problem is that the website where one may be making online payment freezes at the point when the server on the payment side was about to send the request to the merchant's website. There again, the money gets deducted from the account but the message arrives says that the transaction has failed.

In an even more disturbing instance, while booking an airline ticket, the money has been deducted from the bank but the booking has not been done as the merchant has not received the payment, leaving the customer in a lurch and wondering about the whereabouts of the money.

It appears that at last there is some hope coming along. The Reserve Bank of India (RBI) has decided to put in place a framework for harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions using all authorised payment systems.

The action follows the realisation that a large number of customer complaints are filed on account of unsuccessful or 'failed' transactions. Failure could be due to various factors not directly attributable to the customer 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. Rectification/Compensation paid to the customer for these 'failed' transactions is not uniform.

After consultation with various stakeholders, the framework for TAT regarding failed transactions and compensation, therefore, has been finalised and this will result in customer confidence and bring in uniformity in the processing of the failed transactions.

A 'failed transaction' is defined as a transaction which has not been fully completed due to any reason not attributable to the customer such as failure in communication links, non-availability of cash in an ATM, time-out of sessions, etc. Failed transactions shall also include the credits which could not be effected to the beneficiary account on account of lack of full information or lack of proper information and delay in initiating a reversal transaction.

The RBI has stipulated that the prescribed turnaround time (TAT) will be the outer limit for resolution of the failed transaction and that the banks and other operators or system participants shall endeavour towards quicker resolution of such failed transactions.

Significantly, the players have been told clearly that wherever financial compensation is involved, it shall be effected to the customer's account suo motu, without waiting for a complaint or claim from the customer. In the event of customers not getting the benefit of redress of the failure as defined in the TAT, they can register a complaint to the Banking Ombudsman of the RBI.

RBI has issued detailed guidelines for the resolution of failures and the quantum of compensation. In the case of ATM transaction, if the customer account is debited without cash payment, the bank or the company concerned has to proactively reverse the failed transaction within five days. Each day of delay will entitle the customer to a compensation of Rs 100, which has to be credited to the account automatically.

In a credit card transaction, if the credit card account is debited without the beneficiary account being credited, the transaction has to be reversed within a day and each day of delay will entitle the cardholder to a compensation of Rs 100.

In point of sale (PoS) transactions, if the account is debited but there is no generation of charge-slip or if confirmation is not received at the merchant location, the transaction has to be reversed within five days, with a provision for Rs 100 compensation for the delay of every additional day.

Similarly, timeframes have been set for rectification in cases of failures in UPI payments, Aadhaar enabled payment systems, National Automated Clearing House delays and failures, pre-paid payment instructions, etc. The deadline varies from one day to five days as maximum and delays for each day bringing a compensation of Rs 100 to the affected party.

The failure rates on Aadhaar Enabled Payment System for interbank transactions were found to be as high as 60 per cent by the Watal Committee on digital payments which published its report in December last year.

(The views expressed are strictly personal)

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