India’s banking regulator, the Reserve Bank of India (RBI), is considering measures to enhance safety in digital payments, including enabling customers to switch transactions on or off across digital payment modes through issuer channels.
According to Payments Vision 2028, released by the RBI, the central bank also plans to introduce a shared responsibility framework under which both the customer’s bank (issuer) and the beneficiary’s bank would jointly bear liability in cases of unauthorised transactions.
Toggle facility for digital payment modes
Currently, customers can enable or disable domestic and international card transactions, allowing greater control over card usage. Building on this, the RBI plans to explore a similar toggle facility across all digital payment modes.
Such a feature is expected to strengthen consumer confidence while helping curb fraud in digital payment transactions by giving users more control over when and how their accounts are used.
Shared liability framework for fraud protection
At present, the framework for limiting customer liability in payment frauds places responsibility solely on the issuer bank. The RBI now proposes a more balanced approach through a shared responsibility model.
Under this framework, both the issuer bank and the beneficiary bank would jointly bear liability arising from unauthorised digital transactions. This move is expected to incentivise stronger fraud detection and prevention systems, improve coordination between banks, and enable faster intervention, ultimately enhancing consumer protection and trust
New category for small payment system providers
Recognising the rapidly evolving nature of the payments ecosystem, the RBI is considering the introduction of a new category of Small Payment System Providers (SPSPs).
These entities may not require prior authorisation before commencing operations and could initially operate under a relaxed regulatory environment. They would be brought under full regulatory oversight once their scale or systemic importance crosses a defined threshold.
This approach aims to encourage innovation, improve ease of doing business, and ensure that regulatory oversight remains proportionate to risk.
Perpetual regulatory sandbox for innovation
To further support innovation, the RBI plans to expand the concept of a regulatory sandbox into a more continuous or “perpetual” framework.
This would allow new payment solutions to be tested and refined in a controlled environment before being fully regulated, enabling faster adoption of emerging technologies while maintaining systemic stability.
Comprehensive reports on cross-border payments
The RBI also plans to publish detailed reports on cross-border payments, offering a comprehensive analysis of India’s ecosystem.
These reports will cover key metrics such as transaction volumes, costs, transparency, speed, and performance across various channels and corridors. They will also track global developments in legal, regulatory, and technological domains, benchmark India’s progress, and identify areas for improvement.
Review of cross-border payments ecosystem
Simultaneously, the RBI will undertake a comprehensive review of the cross-border payments ecosystem to improve efficiency.
While recent regulatory liberalisation and technological initiatives have enhanced efficiency, the central bank believes further streamlining is possible. The review will identify regulatory, operational, and technological frictions and recommend measures to address them.
The objective is to strengthen India’s cross-border payment landscape, foster innovation and competition, align with global best practices, and accommodate domestic requirements