India’s digital payment system and banking architecture are built on instant transfers and seamless transactions. However, the rising number of digital arrests, banking frauds and unauthorised transactions has pushed regulators to rethink the speed of these transactions.
The Reserve Bank of India (RBI) recently proposed a one-hour delay on select high-value digital payments. This move is proposed to help users combat fraud and detect unauthorised transactions before they are completed and funds are transferred.
Central bank proposes ‘kill switch’
According to the RBI discussion paper, the proposal suggests a one-hour cooling period or ‘pause’ for select digital payments above ₹10,000. During this period, the amount will be provisionally debited but not completely settled. Such a feature will permit users to cancel suspicious transactions.
This move aims to respond to the sharp rise in fraudulent activity across the nation, driven primarily by social engineering and impersonation scams, where victims are targeted and manipulated into authorising payments. To further strengthen safeguards, the RBI has also proposed a kill switch to disable digital payments, stricter monitoring of mule accounts, and trusted person approvals for transactions over ₹50,000.
These proposed moves, if implemented, will be aimed at improving financial transparency, security and boosting digital transaction systems. Still, they might introduce new problems for users.
What experts say
CA Chandni Anandan, Tax Expert at ClearTax, elaborated on this. “The RBI’s proposed one-hour cooling period is a constructive step toward strengthening fraud prevention in digital payments, particularly against social-engineering-led scams. However, it may introduce friction for time-sensitive transactions and could have implications for liquidity and statutory timelines, such as tax payments or vendor payouts linked to compliance deadlines. However, it is to be noted that it is still not implemented. Clarity on exemptions and override mechanisms will be key to minimising disruption for genuine users,” Anandan said,
Hitesh Agrawal, Founder, Them Consulting, further added, “The RBI’s proposed one-hour payment freeze reflects the scale of digital fraud, now exceeding ₹22,000 crore, but it risks overcorrecting. A blanket freeze treats every user as a potential victim of fraud. Good experience design never penalises the many for the behaviour of the few; it reads context and responds proportionally. Payments should pause when something feels off, not when it feels familiar. This introduces a new layer of complexity—‘pending but reversible’—that can create confusion if not designed clearly. Make the cancellation option unmissable, not buried inside a screen. Or allow users to choose a delay when sending to unknown recipients. Fraud prevention works best when you don’t feel it.”
Possible risks
According to experts, apart from its many benefits, the move can still have the following possible unwanted ramifications:
- It can reduce the speed of digital payments and the clearance of funds.
- A delay in daily payments can erode the core appeal of UPI-based instant fund transfers.
- Emergency transactions such as medical expenses and surgery costs can be delayed.
- Critical payments, such as property transfers, land purchases, and medical costs, may be affected.
- Business cash flow, vendor payments, and proper management of working capital cycles might be impacted.
- Fraudsters might then adapt by splitting transactions into smaller ones or using other methods to cheat victims.
- The overall user experience might be hampered by new cancellation windows and kill switches, making day-to-day payments more complex and time-consuming.
The RBI’s proposed move aims to curb rising fraud while preserving faith in digital payments. But its eventual success will depend on whether it can boost digital payment adoption and improve safety without compromising the speed and simplicity that defines the country’s current digital payment ecosystem.
For all personal finance updates, visit here.