 "Consumers may struggle in disputes with digital platforms: RBI dy governor")
Consumers may struggle to resolve disputes with digital payment platforms or receive compensation from them due to poor transparency, Swaminathan J, deputy governor at the Reserve Bank of India (RBI), has said.
Such platforms provide "immense benefits" like accessibility and personalisation but the potential for misuse and fraud increases, he said at Global Money Week 2024 in Paris on Monday. The speech was put up on the RBI’s website on Thursday.
“Often operating outside the regulatory envelope and unconstrained by legacy systems that typically encumber traditional banks, financial technology companies exhibit remarkable agility and adaptability in offering customised financial products. These developments are indeed welcome. However, while they offer immense benefits such as accessibility and hyper-personalisation, they also heighten the risk of misuse and fraud,” said the deputy governor.
“They can expose consumers to the risk of cyberattacks, data breaches, and oftentimes, some financial harm. Consumers may struggle to resolve disputes or obtain compensation due to lack of transparency on the part of such players,” he said.
About unauthorised transactions on digital payment platforms due to phishing attacks or customer negligence, he emphasised the role of awareness and education. Efforts in fostering financial literacy, through initiatives like the National Strategy for Financial Education and the RBI All-India Quiz, are examples of consumer awareness. Collaboration between regulated entities, non-governmental organisations, and grassroots groups will extend financial literacy initiatives to diverse communities.
He outlined consumer protection measures like multi-factor authentication for electronic payments, rigorous risk assessment of digital payment products, and zero-liability provisions in cases of negligence or breaches. Guidelines on digital lending ensure transparency and fair practices, strengthening consumer protection.
Swaminathan stressed the importance of protecting young people and senior citizens from financial frauds and cybercrime. He called for vigilance and proactive measures to address emerging risks and challenges associated with digitalisation.