Source The economics Times
MUMBAI — In a bold move to tackle the surging tide of digital payment scams, the Reserve Bank of India (RBI) has proposed a mandatory “cooling-off” period for certain electronic transactions. Under the new proposal released in a discussion paper on April 9, 2026, users may face a one-hour delay before high-value transfers are finalized.
Cooling Down the Scammers
The proposed rule specifically targets Authorized Push Payment (APP) fraud—a tactic where scammers trick victims into voluntarily sending money to a fraudulent account. By introducing a time buffer, the RBI aims to give users a “window of regret” to cancel suspicious transactions before the money leaves the banking ecosystem.
Key highlights of the proposal include:
Threshold: The one-hour delay would apply to digital payments exceeding ₹10,000.
Cancellation Window: During this hour, the payer’s bank will provisionally debit the amount but hold it. The user retains the right to cancel the transaction at any point during the window.
Risk Alerts: Banks will use this hour to run real-time anomaly detection, flagging transfers that seem out of character for the user and sending urgent alerts.
Balancing Speed and Security
While India’s UPI (Unified Payments Interface) is celebrated globally for its “instant” nature, the RBI argues that a slight friction is necessary for security. This move follows a series of updates set for 2026, including the shift toward Two-Factor Authentication (2FA) that incorporates biometrics or dynamic tokens rather than just SMS-based OTPs.
“The objective is to provide a safety net for users who realize they have been defrauded immediately after hitting ‘send’. A one-hour lag could be the difference between losing a lifetime of savings and stopping a criminal in their tracks,” the discussion paper noted.
Implementation Timeline
The RBI has invited public and stakeholder comments on this proposal until May 8, 2026. If approved, the guidelines will be refined into formal instructions for banks and payment service providers.
Critics worry the move might dampen the “instant” appeal of UPI for business transactions, but proponents argue that for amounts over ₹10,000, security should outweigh speed. Small-scale transactions, such as grocery or tea stall payments, will remain unaffected and instant.
