Amid increasing instances of digital payment fraud, the Reserve Bank of India (RBI) has proposed setting up a digital intelligence platform. To advance this initiative, the central bank has constituted a committee to examine the various aspects of forming a digital public infrastructure for a digital intelligence
platform.
Digital payment fraud has witnessed a staggering surge in the country in the last few years. According to the annual report by the central bank, the number of cases reported to the RBI jumped by 300% to around 36,000 in FY23, compared to around 9,000 cases in FY22.

How RBI plans to curb digital payment fraud
While announcing the decisions of the RBI Monetary Policy Committee (MPC), Governor Shaktikanta Das announced, “Growing instances of digital frauds however highlight the need for a system-wide approach to prevent and mitigate such frauds. It is therefore proposed to establish a digital payments intelligence platform for network-level intelligence and real-time data sharing across the digital payments ecosystem. To take this initiative forward, the Reserve Bank of India has constituted a committee to examine various aspects of setting up this platform.”

In the RBI Statement on Developmental and Regulatory Policies, the central bank said, “The Reserve Bank, over the years, has undertaken a number of measures for the safety and security of digital payments to maintain public confidence in digital payment systems. Sustaining such confidence would require minimising incidence of fraud. Many frauds occur by influencing unsuspecting victims to make the payment or share credentials. While the payment ecosystem (banks, NPCI, card networks, payment aggregators, and payment apps) take various measures on an ongoing basis to protect customers
from such frauds, there is a need for network-level intelligence and real-time data sharing across payment systems.”

Digital intelligence platform: Committee to submit report in two months
The committee will be chaired by Abhaya Hota who played a key role in transforming India into a digital economy as the first chief executive officer of the National Payments Corporation of India (NPCI). Members of the panel would include representatives of NPCI, State Bank of India, HDFC Bank and ICICI Bank. From the payments industry, Vipin Surelia, head of risk at Visa, Arif Khan, chief innovation officer at Razorpay, Jitendra Gupta, founder of Jupiter, and Pranay Jhaveri, managing director of Euronet, have been appointed as members of this committee, according to a report by ET.

The committee will be tasked with defining the operational framework for the new digital intelligence platform to combat payment fraud. This includes determining the extent to which data to be provided by banks, fintech companies and other reporting entities. The committee will also determine how fraudulent transactions will be identified and reported to the Central Payments Fraud Information Repository (CPFIR), the ET report mentioned. The committee is expected to give its recommendations within two months, the central bank said.

Commenting on this initiative, Adhil Shetty, CEO, Bankbazaar.com, says, “RBI is committed to the safety and security of digital payments, which is essential for maintaining public confidence in these platforms. Minimising fraud is essential to sustaining this trust. Despite the diligent efforts of banks, NPCI, card networks, payment aggregators, and payment apps to protect customers, there is a need for network-level intelligence and real-time data sharing. The RBI’s proposal to establish a digital payments intelligence platform, leveraging advanced technologies to combat payment fraud, is a significant step forward. We eagerly wait for the recommendations of the committee which will explore the establishment of this platform and provide their insights within the next two months. More clarity is expected in the
next few months on how this development unfolds.”

Anil Sinha, CTO, Fibe, says, “The Reserve Bank’s establishment of the digital payments intelligence Platform is a vital step in this direction. By enhancing fraud detection and enabling real-time data sharing, the platform will significantly improve the security of digital transactions, maintaining consumer confidence and supporting the continued growth of the fintech ecosystem. Customers will benefit from reduced exposure to fraud and quicker resolution of issues, ensuring a safer and more reliable digital payment experience.”

Alok Singh, Executive Vice President, Digital Business – Ongo, AGS Transact Technologies says, “A digital payments intelligence platform will help to effectively combat the fast-growing, sophisticated ecosystem of cyber frauds, especially with the advent of AI. The real-time sharing of data across the ecosystem can empower stakeholders to identify and address threats more effectively at various levels. This collaborative approach, along with the platform’s network-levels. This collaborative approach, along with the platform’s network-level intelligence, will strengthen consumer confidence in digital payments and incentivise more people to adopt digital financial tools.”

How RBI plans to prevent Aadhaar-based payment fraud
Earlier, the RBI took steps to bring a standardised secure onboarding process for all to curb online fraud related to Aadhaar-enabled payment system (AePS). The central bank said, “To enhance the security of AePS transactions, it is proposed to streamline the onboarding process, including mandatory due diligence, for AePS touchpoint operators, to be followed by banks. Additional fraud risk management requirements will also be considered. Instructions in this regard shall be issued shortly,” according to RBI.

Source : https://economictimes.indiatimes.com/wealth/save/to-curb-upi-digital-payments-fraud-rbi-proposes-to-set-up-a-digital-payment-intelligence-platform/articleshow/110784366.cms