Legal Issues Involved in Electronic Payments System in India

The Indian economy has developed rapidly after the induction of digital interfaces in commerce, trade, and industry particularly after the popularisation of electronic payment systems or digital banking. Since 2016 when the Government of India announced demonetization, electronic payments have been rising and are expected to continue in the future because the government has promoted these types of payments. Internet penetration in India was 47 percent in 2022 and it was more than 100 percent in urban areas as compared to rural areas, now with the expansion of the information technology-enabled generation which is using digital modes of payments more in their daily transactions has resulted in more than 140 crore rupees each day through various methods of digital prevailing in India. State Governments are also prioritizing and making more efforts to ensure that the unprivileged people should have to be provided access to web services so that they may also make payments conciliatory through this method.  Resultantly, there are 103 billion digital transactions worth Indian rupee 166 trillion in the financial year 2023.  It is also expected that digital transactions will also rise to 411 trillion by the year 2027.  Consequently, on advent of high tech system of fund transfer and its enormous use several cases of fraud have also been taking place on daily basis. The legislation has enacted various laws in connivance with the global laws, to resolve the problem, but they are still prevailing.  The present study has been conducted to identify the legal issues and the results arising from these issues and to recommend some pathways to recover from these obstacles.  This study further explains the further way to improvement in fund transfer and making payments using digital mode.  Consequently, it is found that the present legal system does not have sufficient provisions to stop such fraud, and blockage of money with the UPI, payment gateways, banks, and merchants.  There is no single online solution to these problems.  The banking ombudsman is working on resolving some of the issues, but due to the red tapism, such transactions of payment failure and fraud websites could not be resolved.  Sufficient amendments dealing with such transactions have not been incorporated in the present Consumer Protection Act.  Hence, it is recommended that there should be a virtual hearing in the office of the ombudsman as well as in the court of President Consumers Protection.