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While talking about aiming to make payment systems
cashless through four strategic measures, the Reserve Bank of India (RBI)'s
vision 2018 documents falls short of making uniform the consumer charges as
well as convenience charges levied by banks and merchants for similar services.
Non-uniformality of charges is what leads to several grievances of banking
customers. As pointed out by Moneylife in the past, banks have discovered that
it is extremely easy to pick the pockets of depositors and customers to make
them pay for a variety of basic services, because they are too disorganised to
pose a challenge.
The Vision-2018 document released by the central bank
focuses on four strategic initiatives like responsive regulation, robust
infrastructure, effective supervision and customer centricity. RBI also talks
about improving five broad contours like coverage, convenience, confidence,
convergence and cost. "For coverage, we aim to enable wider access to a
variety of electronic payment services. Convenience would be provided by
enhancing user experience through ease of use and of products and services.
Similarly, we will build confidence by promoting integrity of systems, security
of operations and customer protection. Convergence would be achieved by
ensuring inter-operatibility across service providers. We also aim to make
services cost effective for both the users and service providers," the
central bank says.
However, according to consumer activists, there is no
uniformality on charges levied by banks for different services, like cheque
clearance, usage of ATMs, and point-of-sales (POS) terminals. "Charges
levied by some POS are as high as 2.5% whereas some POS do not pass on them to
customers. Similarly, when it comes to using netbanking facility to pay any
bill, MTNL gives 1% discount; BEST does the same thing but levies internet
banking charge. Ticket booking through IRCTC is chargeable by some banks and
not by other banks. ICICI bank charges for online National Electronic Funds
Transfer (NEFT) while Bank of Baroda (BOB) and YES Bank do not. This one leads
to consumer complaints which we all consumer activists have been facing for
quite some time," says Abhay Datar, retired banker and consumer activist,
who is associated with Moneylife Foundation's free helplines.
Meanwhile, banks are eliminating the convenience of their
massive investment in core banking solutions (which promised anytime, anywhere
banking) by dreaming up new charges. A senior citizen told Moneylife about how
he was levied an ‘intercity charge’ of Rs50 for depositing cash in his own bank
account in Bengaluru (not his home branch). A Moneylife reader was charged a
fee to deposit cash in his own account. Reversing these charges requires a
sustained battle, so most depositors simply give up.
According to RBI, all segments of electronic payments,
particularly retail electronic payments, have shown healthy growth both in
terms of volume and value of usage. For example, RTGS and NEFT volumes
increased almost threefold between 2013 and 2016 reflecting greater adoption of
the system by all segments of users. Similarly, with increasing number of banks
offering mobile banking services and driven by the growth in e-commerce and use
of mobile payment applications, the volume of mobile banking transactions has
increased nearly seven-fold and the value of transactions has shown a steep
rise. Card transactions have also grown significantly at both ATMs as well as
at the POS with the growth in debit card usage at POS picking up significantly.
The growth in volume and value of transactions using prepaid payment
instruments (PPIs) issued by banks and authorised non-bank entities has also
been significant.
The volume and value in Immediate Payment Service (IMPS)
has also grown significantly with the development of the IMPS as a
multi-channel system providing various options to customers to originate
transactions. Cheque payments, on the other hand, are showing a declining trend
in terms of volume as well as value between 2013 and 2016, the central bank
says.
RBI says safety and security of payment systems and
transactions is an important factor that helps in boosting the trust and
confidence of the customers in using electronic payment mechanisms. It said, it
has advised all banks to issue all new cards based on EMV Chip and PIN.
"Presently the ATMs in the country read and process
the card transactions only on the basis of data contained in the magnetic
stripe, even though the card may be a Chip and PIN card. With the roadmap in
place for issuance of EMV Chip and PIN cards, the aim will be to ensure that
all the ATMs in the country migrate to processing of EMV Chip and PIN cards on
the basis of Chip data rather than magnetic stripe data," RBI said.
According to RBI, customer acceptance and usage of
payment products provide one half of the required network effect in payment
systems with the other half coming from the entities willing to accept such
payments. It says, "Confidence, convenience, and cost are key aspects that
will encourage wider customer adoption and usage of electronic payments.
Customers' increasing expectations are driving provider responses. Towards this
end, Vision-2018 would strive to keep the customer interest at the centre of
payment system policy actions."
The central bank aims to strengthen customer grievance
redressal mechanism, enhance customer education and awareness, and protect
customer interests.
Strengthening
customer grievance redressal mechanism: A robust and responsive customer grievance
redressal system is essential to build an environment of trust and confidence
in payment systems. Further, customer experience should be uniform irrespective
of whether the service is being provided by banks or non-bank entities.
Hence,
i. The Bank would frame necessary guidelines to ensure
that existing complaint redressal framework of authorised non-bank entities is
improved, and that new payment systems are set up with appropriate mechanisms
to address customer grievances in a proactive manner.
ii. Payment System Operators (PSOs) would also be
required to adequately train their own front office staff and their agents to
understand and appropriately address diverse requirements when servicing their
customers.
Enhancing
customer education and awareness: Customer confidence in payment systems is reposed
with usage combined with better awareness of the product and processes. A well
informed customer base would also facilitate faster migration away from cash
payments.
Involvement of stakeholders in this exercise can help to
reap greater benefits, and, as such, the Bank would collaborate with other
stakeholders in creating an environment of awareness and education on
e-payments. Hence,
i. The Bank, in collaboration with all the stakeholders,
would endeavour to enhance customer awareness through structured Electronic
Banking Awareness and Training (e-BAAT) programs.
ii. Further, the Bank would prepare a framework requiring
PSOs to transparently disclose all fees they charge as part of their service
along with the applicable terms and conditions, including liability and use of
customer data.
Protecting
Customer's interest: The Bank would encourage payment system providers to
adopt best practices for protecting customer interests, by putting in place
robust fraud and risk monitoring systems. In addition, a regulatory framework
to limit customer liability in case of unauthorised transactions would be put
in place.
RBI also talks about making available positive
confirmation for RTGS transactions, similar to NEFT payments. NEFT system has
the feature of sending positive confirmation to remitters regarding the
completion of the funds transfer, thus giving an assurance to the remitter that
the funds have been successfully credited to the beneficiary account. "In
order to provide the same confidence to customers using RTGS system for funds
transfer, the Bank will incorporate the feature of positive confirmation for
RTGS transactions too. Further, the feature in the NEFT system will also be strengthened
by ensuring that all banks send the confirmation in a timely manner," it
added.
"Leaving aside the internal aspects like
infrastructure and mechanism, the overall approach of the said vision appears
to be consumer friendly," Mr Datar says.
Payment
& Settlement Systems in India: Vision-2018
Building best of class payment and settlement systems for
a “less-cash” India through responsive regulation, robust infrastructure,
effective supervision and customer centricity...
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