Summary of this article
RBI proposes lagged credit to check suspicious digital payments
Kill switch feature may help users stop fraudulent transactions
Public feedback invited on new digital payment safety measures
The Reserve Bank of India (RBI) has released a discussion paper seeking suggestions that should be taken to prevent fraud; it is based on the February 2026 Statement on Developmental and Regulatory Policies and is aimed at making the protection of users more robust as digital transactions are on the rise.
Digital payments, including mobile banking, cards, and Unified Payments Interface (UPI), have experienced high growth in the last 10 years. According to data from the National Cyber Crime Reporting Portal (NCRP), around 28 lakh frauds were reported in 2025 alone, with the total volume of these scams soaring up to Rs 22,931 crore.
Increased Fraud Risks
RBI has highlighted the issue of sophisticated methods employed by fraudsters trying to cheat people. These include phishing links, fraudulent payment demands, manipulation using calls and messages, and so on. With the pace and convenience of payment systems, chances of misuse have also increased.
In the discussion paper, RBI has highlighted potential gaps in the safeguards in place to prevent fraud cases and what new measures can be taken to tackle them. Some potential ways to reduce the chances of fraud will be discussed further.
Key Safeguards Proposed
One of the measures mentioned in the discussion paper includes lagged credit. This means that certain transactions carried out by the user will not be credited immediately to the beneficiaries in particular cases. This lag would give enough time to check for any abnormalities in transactions and help detect any fraud.
Another mechanism, called a 'kill switch', has been proposed for users; this "kill switch" will have the power to suspend or reject any payment request when suspected of being fraudulent. This measure can be provided within banking apps and other payment mediums. It would help the user act promptly in case there is any suspicion about the payment.
Moreover, RBI has considered whether the current measures for transaction monitoring and authentication are sufficient or if an improvement in the system is required to better detect any abnormality in transactions. Payment system participants, including banks and Payment Service Providers (PSPs) may have to upgrade their systems in this regard.
Efficient Payment System
While proposing measures for user safety, RBI has emphasised making sure that they don't hinder payment efficiency. Instant settlement is one of the core values of digital payments, and it needs to remain intact.
RBI has pointed out that the level of risk should be similar to the level of safeguards. Higher-risk transactions can be subject to further checks, and regular payments can be processed immediately.
What It Means For Consumers
The proposals might bring minimal delays in receiving funds for some transactions that are classified as "higher risk". This can influence time-sensitive payments under certain circumstances.
Meanwhile, features like a "kill switch" might assist users in responding quickly and avoiding losses. The ability to halt transactions when fraud is suspected can diminish the effects of the unauthorised transfers.
Additionally, extra checks during transactions to reduce the chances of fraud may increase the duration of completing certain transactions.
Public Comments
RBI has consulted the proposals in its Connect 2 Regulate platform. The deadline for comments is May 8, 2026.
The central bank will analyse the comments received before making any decision regarding the implementation of these measures.
