The government is willing to strengthen laws to plug security holes in digital payment systems, and will soon invite ideas from users on how to protect consumer interests, Union minister Ravi Shankar Prasad said on Friday.
The Narendra Modi government is pushing for a largely digital economy which it says will stamp out illicit cash and end counterfeiting. Digital transactions in the country spiked by 195% between October 2016 and January 2017, after the government banned high-value banknotes.
“Digital payments rules of e-wallets shall be floated soon to take into consideration consumer interest and safety. The rules will be made after taking into account issues and concerns that arise after the consultation paper is floated,” said Prasad, the minister for information technology.
The draft of the consultation paper is ready, he said.
Critics of the demonetisation exercise and experts have pointed out the country’s online payment system is not foolproof and open to potential attacks by cyber thieves who can wipe out millions of rupees by bypassing the weak firewalls.
The consultation paper will give consumers as well as merchants a chance to voice their worries about the new payments system.
The minister said the IT ministry was also in talks with banks and National Payments Council of India (NPCI) to help merchants with switching over to digital payments.
A senior government official said that PCI -- a data security standard adopted by major cards including Visa, MasterCard and American Express -- and USSD are also being strengthened to make sure that digital payments are safer. He said wallet insurance is also being considered for implementation given the rise in digital payments.
USSD is a communication technology used to send text messages between a mobile phone and an application program.
The minister added that the consultation paper or the new rules will not be in conflict with the Reserve Bank of India (RBI)’s regulations.
“The new guidelines will not challenge the RBI rules but if there is an amendment to be made under the IT Act following the consultation process, the government will go ahead with the changes,” he added.
The government had announced its decision to launch Aadhaar Pay -- a merchant version of Aadhaar-enabled payment system – which is expected to benefit people who don’t have debit/credit cards, mobile wallets and mobile phones.
He said the government has set a target of 2,500 crore digital transactions in the financial year 2017-18 through different platforms.
“Banks have been advised to introduce an additional 10 lakh PoS by March 2017 and 20 lakh Aadhaar-based PoS by September this year,” Prasad added. PoS, the commonly used term for point of sale, are online terminals where retail transactions are carried out.
“India’s digital economy is expected to hit $1 trillion in the next five to seven years combining,” the minister said.