In an effort to combat the escalating incidence of online payment fraud, the government is contemplating the implementation of a minimum time constraint for transactions exceeding a specified amount in the initial interaction between two individuals. As reported by The Indian Express based on inputs from government sources, the proposed strategy may involve instituting a potential four-hour timeframe for the inaugural transaction between two users for digital payments, particularly those exceeding Rs 2,000.


While acknowledging that this approach may introduce some friction to digital payments, officials underscore the imperative nature of addressing cybersecurity concerns. If finalised, this measure is anticipated to encompass a broad spectrum of digital transactions conducted through platforms such as Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and the Unified Payments Interface (UPI).


Crucially, the envisaged plan is not confined to delaying or restricting the first transaction upon account creation, a practice already in place across various digital payment channels. Rather, it aims to regulate every initial transaction between two users, irrespective of their individual transaction history.


Presently, when a user establishes a new UPI account, they can transfer a maximum of Rs 5,000 within the initial 24 hours. Similarly, in the case of National Electronic Funds Transfer (NEFT), following the activation of a beneficiary, up to Rs 50,000 (in full or parts) can be transferred during the first 24 hours.


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Under the proposed plan, a four-hour time limit would be applicable each time a user initiates the first payment exceeding Rs 2,000 to another user with whom they have not previously transacted.


A senior government official, speaking on condition of anonymity, stated, "We are looking to add a time limit of four hours for first-time digital transactions over Rs 2,000. The discussion will be taken up during a meeting on Tuesday with government and industry stakeholders, including the Reserve Bank of India, various public and private sector banks, and tech companies like Google and Razorpay."


Explaining the mechanism, the official added, "Basically, how it will work is that you will have four hours after making a payment to someone for the first time to reverse or modify the payment. It will be along the lines of NEFT (National Electronic Funds Transfer) where the transaction happens within a few hours."


While the proposal initially considered omitting amount limit thresholds, informal discussions with industry representatives highlighted potential impacts on smaller transactions like grocery purchases. Consequently, a provision is being considered to exempt transactions under Rs 2,000 from this regulation.