Online Dispute Resolution System for Digital Payments

Ashish M. Shaji

12 Aug, 2020

In a major development, the Reserve Bank of India (RBI) announced the introduction of the Online Dispute Resolution system for resolving disputes and grievances of customers arising due to digital payments. The RBI released a statement on Developmental and Regulatory policies which also comprised of this resolution system.

What is the need for Online Dispute Resolution (ODR) system for digital payments?

The use of digital payment mode has seen a tremendous rise, and with the coronavirus pandemic around, don’t be surprised to more people using the digital model to make payments.

However, with the increasing number of digital payments, there has also been a steady rise in the number of disputes and grievances. You could have experienced failed transactions or may have a grievance relating to the use of digital payments. You could have witnessed “transaction failed but amount debited” like issues. Hence the RBI intends to resolve these using a proper redressal mechanism.

The payment system vision of 2021 of the RBI highlights the need for a technology-driven, rule-based, customer-friendly, and transparent dispute redressal system. Therefore with a view to achieving that, the RBI advised all authorized payment System Operators- banks and non-banks and their participants to put a system/s for ODR. 

Structure of the Online Dispute Resolution system

The RBI specifies the structure of the ODR system under the heading Minimum Requirements of the ODR system in the circular released by it on August 6, 2020.

• Every Payment System Operator (PSO) is required to make available an ODR system to resolve disputes and grievances arising from failed transactions and also are required to provide the Payment System Participants (PSP) access to the system. 
•  The PSO and its PSPs must provide access to customers for lodging the disputes and grievances pertaining to failed transactions irrespective of those transactions being on-us or off-us in nature. 

What kind of transactions is covered under the scope of the ODR system?

The following kind of transactions shall be covered under the ODR system:

• Disputes and grievances pertaining to failed transactions will be covered, which includes all types of transactions mentioned in the circular by RBI DPSS.CO.PD No. 629/02.01.014/2019-20 dated 20 September 2019 on “Harmonization of Turnaround Time and customer compensation for failed transactions using authorized payments systems.”
• All provisions, including those pertaining to Turn Around Time and compensation to customers specified in the above circular, must be adhered to while resolving disputes and grievances using the ODR system.

What does the RBI state regarding lodging and tracking the disputes and grievances?

Facility to lodge customer disputes and grievances-

• The RBI states that the customers shall be provided with one or more channels to lodge grievances and disputes- web-based or paper-based compliant form, IVR (Interactive Voice Response), mobile application, call center, SMS, etc.
• This facility shall be provided by the Payment System Operator and by the Payment System Participants with a mechanism to link/access the Online Dispute Resolution system. The industry can progressively increase the variety of these channels.
• Moreover, in case of mobile phone-based systems such as UPI (Unified Payment Interface), third party providers shall also provide customers the facility to lodge disputes and grievances through the same mobile app that has been used for making payments, which will be integrated with the ODR system.

Process of lodging the dispute or grievance-

• The RBI stated that the process of lodging the customer dispute or grievance will be simple and shall involve only the essential minimum details. The Online Dispute Resolution (ODR) system will be made capable of fetching full details automatically based on the information provided by the customers.
• The aspect of confidentiality of data will be taken care of while designing such parameters.
• When a customer lodges a dispute or grievance, a unique reference number will be allocated by the ODR system.
• A facility shall be provided to the customers where they would be able to track the status of the dispute or grievance using the reference number.

What are the guidelines regarding the implementation of the Online Dispute Resolution system?

The RBI has stated that the authorized Payment System Operators are required to implement the ODR system for disputes and grievances pertaining to a failed transaction in their respective payment systems by Jan 1, 2021.

The Payment System Operators are required to provide access to such a system to its participating members. Any entity that sets up its payment system in India thereafter or participating therein is required to make available the ODR system at the commencement of its operations. 

What if the grievance is not redressed?

In case of a dispute or grievance arising out of digital payments, the complainant, for redressal of grievance, must approach the concerned system participant.

In case the System Participant doesn’t reply within a one month period after the receipt of the complaint, or if it rejects the complaint, or if the complainant is not satisfied with the reply provided to it, the complainant can file the complaint with the Ombudsman for digital transactions within whose jurisdiction the branch or the office of the System Participant complained against is located.

Conclusion