Bankers are worried that customers might cry fraud to avoid making payments.
“The onus of proving that the customer was negligent rests with banks,” said A P Hota, MD & CEO, National Payments Corporation of India (NPCI), referring to the Reserve Bank of India’s latest circular on customer liability in electronic payments. According to the chief of the payments body, the move will help promote electronic payments.
Banks agree that the new norms will provide greater comfort to customers and encourage digital transactions. However, they are worried about dealing with fraudsters who might try to misuse regulations. While in the past banks simply avoided compensating customers for suspect transaction, the new rules require that banks prove the complicity of the customer.
Bankers say that if the transaction log shows that it has been authenticated by the customer with a secret pin or password it is treated as negligence on the part of the customer. However, in case there is a fraud where transactions are done internationally without second factor authentication (one-time password or PIN), the amount is reversed and a charge-back is made on the merchant within 45 days under the Visa or MasterCard agreement.
The norms also state that where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorized transaction to the bank. Any loss occurring after the reporting of the unauthorized transaction shall be borne by the bank.