E-wallets to resolve complaints via internal ombudsman

Large pre-paid instrument (PPI) issuers will now have to set up an internal ombudsman to address customers' grievances.

The Reserve Bank of India (RBI), through its Statement on Developmental and Regulatory Policies (issued on October 4), has directed that large non-bank PPI issuers should have an internal ombudsman scheme to strengthen the grievance redressal process of these payment entities.

Paytm Wallet and PhonePe Wallet are some examples of pre-paid instruments.

The central bank launched the Ombudsman Scheme for Digital Transactions with effect from January 31, 2019. Under the scheme, a senior official appointed by RBI will redress the customer complaints against the prepaid instrument issuer. As per the RBI statement, "The internal ombudsman is intended to facilitate a swift and cost-effective complaint redressal mechanism within the entity and provide an additional tier for grievance redressal." Instructions in this regard will be issued by October 15, 2019.

Currently, an individual can file complaint with the digital ombudsman if the issuer does not reply within a period of one month after receipt of the complaint; rejects the complaint; if the complainant is not satisfied with the reply given. The complainant can file the complaint with the Ombudsman for Digital Transactions within whose jurisdiction the branch or office of the System Participant complained against is located. For complaints arising out of services with centralised operations, the same shall be filed before the Ombudsman for Digital Transactions within whose territorial jurisdiction the billing / declared address of the customer is located.

As per the ombudsman scheme, here are the complaints that can be filed:

• Failure in crediting merchant's account within reasonable time;
• Failure to load funds within reasonable time in wallets / cards;
• Unauthorized electronic fund transfer;
• Non-Transfer / Refusal to transfer/ failure to transfer within reasonable time, the balance in the Prepaid Payment Instruments to the holder’s ‘own’ bank account or back to source at the time of closure, expiry of validity period etc., of the Prepaid Payment Instrument;
• Failure to refund within reasonable time / refusal to refund in case of unsuccessful / returned / rejected / cancelled / transactions;
• Non-credit / delay in crediting the account of the Prepaid Payment Instrument holder as per the terms and conditions of the promotions offer(s) from time to time, if any;
• Non-adherence to any other instruction of the Reserve Bank on Prepaid Payment Instruments.

Why the ombudsman scheme was launched
The ombudsman scheme was launched as there was a surge in complaints in digital payments following demonetisation of Rs 500 and Rs 1,000 notes in November 2016. According to RBI's annual report for FY17-18, there has been an increase in the number of complaints related to digital payments and PPIs issued by banks and non-banks.

According to the RBI report, a total of 3.5 billion transactions took place with PPIs valued at Rs 1,416 billion. Further, the share of electronic transactions in retail payments have increased to 92.6 per cent in 2017-18 as compared to 88.9 per cent in the previous year.