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Debt Resolution

Future of Online Dispute Resolution System for Digital Payments

“A scheme of retail payments in offline mode using cards and mobile devices, and a system of on online dispute resolution system for digital payments will also be introduced,” said RBI governor Shaktikanta Das

Richard Susskind propounds that “access to justice encompasses four layers – legal health promotion, dispute avoidance, dispute containment, and authoritative dispute resolution”. He points out that the traditional court system has been concerned with only the last two of these. This observation holds true for India as well. The judiciary of the country has systematically employed technology for resolving disputes and keeping the court system alive virtually. However, the time has come for the focus to shift from dispute resolution to dispute avoidance, containment, and improving the overall legal health.

Online dispute resolution India

Investing in ODR through the adoption of more advanced second-generation technology can help India progress towards a futuristic justice system. The COVID-19 pandemic has been extremely unfortunate and has necessitated change. An inevitable change that justice delivery systems all over the world have embraced is the integration of technology

Read Also – ODR: A Tool to Enable Justice in The Post Coronavirus Era

The integration of technology in judicial delivery systems is an inevitable change happening all over the world. 

This integration of Information, Communication, and Technology into the dispute resolution process provides great potential to overcome challenges associated with Courts.

Key benefits of Online Dispute Resolution (ODR) are-

  • Cost-Effective – ODR has the potential to reduce costs by way of reducing time for legal proceedings and by doing away with the need for legal advice in certain cases.
  • Convenient and Quick- ODR employs simpler procedures and a fixed timeline for processes leading to effective dispute resolution. Not requiring the physical presence of parties also saves time on travel.
  • Encourages Dispute Resolution- ODR tools like online mediation are premised on mutually arriving at a conclusion.

    Read Also – Importance of online payment for law firms

Important Considerations in ODR-

  • Integrity- Ensuring the accuracy and authenticity of data and documents is essential to guarantee a fair process and an enforceable outcome. 
  • Confidentiality- An ODR process is likely to involve confidential commercial and private data and hence the system should ensure a well-developed confidentiality framework.
  • Actionability- a dynamic ODR platform that adapts to advancements in technology and legal ecosystems requires the ability to explore, analyze, predict and act upon the data available.

RBI Guidelines-

Reserve Bank of India (RBI) in its Statement on Developmental and Regulatory Policies dated 6th August 2020, had announced the introduction of an Online Dispute Resolution (ODR) system for resolving customer disputes and grievances pertaining to digital payments.

RBI issued its statement setting out measures to deepen digital payments. The Apex Bank has noticed a significant increase in the number of complaints and grievances in the digital payment space. 

The Bank has recognized the need for technology-driven redressal mechanisms to resolve such disputes effectively and expeditiously. Through the notification given by NITI Ayog, they propose to mandate the adoption of ODR systems by the payment system operators (PSO) in a phased manner.  

PSOs are supposed to adopt ODR systems for disputes and grievances arising out of failed payment transactions. RBI prescribed a framework for resolution of failed transactions and due to any reason not attributable to the customer such as non-availability of cash in an automated teller machine (ATM), time-out of sessions while making online payments, etc. The RBI had also clarified that failed transactions would include instances where payments cannot be made to the beneficiary account due to a lack of complete or accurate information for processing the payment, and related delays in initiating a reversal transaction. The RBI had also prescribed compensation of INR 100 for each working day during which the reversal of payments is delayed.

This notification is applicable to both Bank and Non-Banking PSOs. The deadline is January 01, 2021, within which the PSOs are required to implement the ODR for failed transactions. PSOs have to make sure that each of their PSPs are3 given access to the ODR system. Customers should be provided with a facility to lodge their complaints on the ODR system. Such a system could be offered through various ways such as web-based or paper-based forms, voice assistance, etc. 

The processes adopted in the ODR system to resolve disputes must be simple and should require only minimum details for resolution. The customers raising a dispute on the ODR system must be allotted a unique reference number and facility for tracking the status of resolution of such disputes. If such disputes are not resolved even after one month, the customers may approach the banking ombudsmen to obtain relief.

The current process of the ODR System is given as under-

  1. Customers are provided with multiple channels to lodge their complaints.
  2. In the case of mobile-based service providers, customers shall also be provided the facility to lodge complaints through the same mobile app for making payments, which shall then be integrated with the ODR System. 
  3. ODR system is capable to capture full details of customers using the information provided. 
  4. Data confidentiality shall be taken care of.
  5. A Unique Reference Number is allotted by the system. A facility shall be provided to the customer to track his complaint.

Recommendations by the NITI Aayog Expert Committee on ODR-

  • Increase access to digital infrastructure
  • Expand the scope of ODR Professionals through training
  • Encourage the development of different variants of ODR
  • Collaborate with the private sector to resolve an upsurge of cases arising during the COVID-19 related pandemic
  • Build TRUST in ODR by adopting ODR for Government Litigation, introducing an awareness campaign.
  • Strengthen the existing legislative framework.

These principles are designed to guide and regulate various aspects of ODR processes – the technology platform used in ODR processes, the institutions providing ODR services, and the Neutrals that facilitate or adjudicate the dispute resolution process.

Conclusion-

While a great number of challenges exist, the future of ODR in India is bright.

It is true that India has the key elements for introducing a comprehensive framework for technology in the dispute resolution process, namely, expertise and technology capacity. 

Currently, this system is applicable only for failed transactions lodged on the ODR system. The future of ICT in this area will be extended by RBI to other types of payment disputes.

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by Louis Noronha

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