No more delay in resolution of failed transaction, RBI reduces Turn Around Time
The Reserve Bank of India (“RBI”) on September 20, 2019 issued a circular on harmonisation of Turn Around Time (“TAT”) and customer compensation for failed transactions using authorised payment systems. TAT is the time limit under which the banks and other participants of the payment systems (“Merchant”) are supposed to resolve any failed or unsuccessful transaction issue.
The RBI noted that a large number of customer complaints are regarding “failed” or unsuccessful transactions, either through ATM or online payment systems. Furthermore, there is no compensation paid to the customers for delay in resolution of these “failed” transactions. RBI, in the circular, has explained the failed transaction as a transaction which has not been fully completed due to any reason not 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.
Through this framework, the RBI has provided with a time period within which the Merchants are supposed to resolve the failed transaction issue. RBI has also specified that the banks and operators of other payment systems shall transfer the compensation directly to the aggrieved customer’s bank account. If the customers do not get the benefit of redressal under this framework within the stipulated time period, they can register a complaint to the Banking Ombudsman of RBI.
Following is the chart which provides the timeline for auto-reversal and compensation payable in cases of failed transactions using the authorised payment systems. “R” is the day on which the reversal is concluded and the funds are received by the issuer. “T” is the day of transaction. The framework will be in effect from October 15, 2019.
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Serial No. |
Description of the Incident |
Framework for auto-reversal and compensation |
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|
Timeline for auto-reversal |
Compensation payable |
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|
I. |
II. |
III. |
IV. |
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1. |
Automated Teller Machines (ATMs) including Micro-ATMs |
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a) |
Customer’s account debited but cash not dispensed. |
Pro-active reversal (R) of failed transaction within a maximum of T+5 days. |
INR 100 per day of delay beyond T+5 days, to the credit of the account holder. |
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2. |
Card Transaction |
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|
a) |
Card to Card transfer
Card account debited but the beneficiary card account not credited. |
Transaction to be reversed (R) latest within T+1 day, if credit is not effected to the beneficiary account. |
INR 100 per day of delay beyond T+1 day. |
|
b) |
Point of Sale (PoS) (Card Present) including Cash at PoS |
Auto-Reversal within T+5 days. |
INR 100 per day of delay beyond T+5 days. |
|
c) |
Card Not Present (CNP) (e-commerce) Account debited but confirmation not received at merchant’s system. |
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3. |
Immediate Payment System (IMPS) |
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a) |
Account debited but the beneficiary account is not credited. |
If unable to credit to beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. |
INR 100 per day if delay is beyond T + 1 day. |
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4. |
Unified Payments Interface (UPI) |
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a) |
Account debited but the beneficiary account is not credited (transfer of funds). |
If unable to credit the beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. |
INR 100 per day if delay is beyond T + 1 day. |
|
b) |
Account debited but transaction confirmation not received at merchant location (payment to merchant). |
Auto-reversal within T + 5 days. |
INR 100 per day if delay is beyond T + 5 days. |
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5. |
Aadhar Enabled Payment System (including Aadhaar Pay) |
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a) |
Account debited but transaction confirmation not received at merchant location. |
Acquirer to initiate “Credit Adjustment” within T + 5 days. |
INR 100 per day if delay is beyond T + 5 days. |
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b) |
Account debited but beneficiary account not credited. |
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6. |
Aadhaar Payment Bridge System |
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a) |
Delay in crediting beneficiary’s account. |
Beneficiary bank to reverse the transaction within T + 1 day. |
INR 100 per day if delay is beyond T + 1 day. |
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7. |
National Automated Clearing House (NACH) |
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a) |
Delay in crediting beneficiary’s account or reversal of amount. |
Beneficiary bank to reverse the uncredited transaction within T + 1 day. |
INR 100 per day if delay is beyond T + 1 day. |
|
b) |
Account debited despite revocation of debit mandate with the bank by the customer. |
Customer’s bank will be responsible for such debit. Resolution to be completed within T + 1 day. |
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8. |
Prepaid Payment Instruments (PPIs) – Cards/Wallets |
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a) |
Off-Us transaction
The transaction will ride on UPI, card network, IMPS, etc., as the case may be. The TAT and compensation rule of respective system shall apply. |
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b) |
On-Us transaction PPI debited but transaction confirmation not received at merchant location. |
Reversal effected in Remitter’s account within T + 1 day. |
INR 100 per day if delay is beyond T + 1 day. |
Quick View
This move originates from RBI’s Statement on Developmental and Regulatory Policies issued on April 04, 2019, in which RBI stated that it was in the process of drafting a framework on TAT and auto-reversal of the funds. Not only does this guideline bring a fixed timeline for resolution of the transaction related issues sought by customers who have faced a “failed transaction” but also imposes penalty on the Merchants.
The customers often have to wait for a long time to get the refund of the amount displaced due to failed transaction, which led the RBI to issue this framework. It is expected that any issues related to failed transactions will be solved quicker, since, the RBI has also imposed penalties in case the Merchants do not resolve the issue within the stipulated time period. With the RBI coming up with clear instructions with regards to TAT, we anticipate that this will lead to a spike in volume of online transactions as this will go a long way in boosting consumer confidence with respect to online transactions.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.