RBI weighs adding 'friction' to digital payments to tackle online fraud
May 29, 2026
Central bank is exploring transaction delays, broader customer controls and a kill switch mechanism as digital payment frauds continue to rise in value
The Reserve Bank of India (RBI) is considering introducing additional “frictions” in digital payment systems as it seeks to curb authorised push payment frauds, where customers themselves initiate transactions that later turn out to be fraudulent.
The RBI, in its annual report for 2025-26, said it would explore measures that could slow down certain digital transactions despite existing safeguards such as additional factor authentication, payee name verification and tokenisation.
“To address the continuing challenge of authorised push payment frauds — where customers themselves initiate payments despite the various safeguards already in place ... introduction of certain frictions in digital payment processes would be explored,” the RBI said.
The central bank added that the move would aim at “enhancing customer protection and facilitating more effective recovery of funds”.
The proposal signals a potential shift in India's digital payments architecture, which has largely prioritised speed and seamlessness as the country built one of the world's largest instant payments ecosystems around the Unified Payments Interface (UPI).
Authorised push payment frauds have emerged as a growing challenge globally as scammers increasingly rely on social engineering techniques to persuade users to transfer money voluntarily, making recovery more difficult even when transactions are authenticated.
The RBI did not specify what form the proposed “frictions” could take.
In a discussion paper released in April, the RBI suggested measures to curb rising fraud in digital payments, including introducing a one-hour delay for digital payments above Rs 10,000 before the funds are credited to a beneficiary's account. Other measures include additional authentication by “trusted individuals” for vulnerable users, tighter scrutiny of accounts receiving large credits and expanded customer-controlled safeguards.
The proposal comes at a time when transactions above Rs 10,000 account for about 45 per cent of fraud cases by volume and 98.5 per cent by value. Digital payment frauds have increased 41 times over the past five years in value terms to nearly Rs 23,000 crore.
The RBI, in its annual report, also said it would explore expanding customer-controlled security features across digital payment systems.
“Introduction of a similar facility for all digital payment modes shall be explored along with a ‘kill switch’ to block all debits from the account in one stroke,” the RBI said.
At present, customers can switch domestic and international card transactions on and off, a feature the RBI said had helped users “exercise greater control”.
According to the annual report, the proposed broader controls and kill switch facility would “help bolster consumer confidence and contribute towards controlling frauds in digital payment transactions”.
Separately, the RBI said it would continue efforts to expand cross-border connectivity for UPI by linking India's payments system with fast payment systems in partner jurisdictions.
The central bank said it would work towards “enabling seamless, secure, and cost-effective cross-border remittances as well as merchant payments”.
India has been steadily expanding UPI linkages with overseas jurisdictions as part of a broader push to internationalise its digital payments infrastructure.
[The Business Standard]
