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The End of Tiny Transaction Texts? Indian Banks Request a Halt to SMS Alerts for Small Payments
Indian banks have requested the RBI to stop mandatory SMS alerts for electronic transactions under ₹100, arguing the constant texts for small payments cause customer fatigue and clutter.This change aims to reduce operational costs and prevent important alerts for larger transactions from being missed, while customers can still opt for free app or email notifications.
Author: Nimmydev
Published: 3 hours ago
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A move to cut customer 'clutter' and reduce operational costs sees Indian lenders approach the Reserve Bank of India (RBI) to stop sending mandatory SMS notifications for electronic transactions under ₹100 (approximately £1).
Indian banks are formally requesting permission from the country’s central banking body, the Reserve Bank of India (RBI), to cease sending text message alerts for low-value transactions. This proposal, submitted by both public and private sector banks, aims to overhaul the current alert system which many argue has become unwieldy due to the massive surge in digital payments.
The Problem with Prosperity
The core issue stems from the phenomenal success of online payment channels, most notably the Unified Payments Interface (UPI). The ease of use offered by platforms such as UPI has led to a boom in small, everyday transactions from buying a cup of tea to paying for a rickshaw ride.
Banks have highlighted two major drawbacks to the current, mandatory system:
- Customer Overload: The constant stream of SMS notifications for transactions as small as one rupee is creating 'clutter and fatigue' for customers. There is a serious concern that consumers, overwhelmed by these frequent low-value messages, may begin to disregard their text alerts altogether. This could tragically lead to them missing a crucial alert for a larger, potentially fraudulent transaction.
- High Operational Costs: Under current rules, banks are mandated to send a text alert for every electronic transaction, regardless of the amount. Industry estimates suggest that sending a single SMS costs a bank around ₹0.20. When multiplied by the billions of small-value transactions that take place monthly, this creates a substantial operational expense, an unfortunate cost that is often passed on to the customer.
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Proposed Safeguards and Alternatives
In their representation to the RBI, banks have been careful to include security measures to ensure that customer protection is not compromised. The proposal is not simply to scrap the alerts, but to replace the mandatory SMS with optional and less costly alternatives.
The proposed system would work as follows:
- Customer Consent: If the proposal is approved, banks will take explicit consent from each customer before implementing the change. Crucially, customers will have the choice to opt out of receiving texts for transactions under the ₹100 cap.
- Free Digital Notifications: Even if a customer opts out of text messages, they will still receive transaction notifications through banking applications or via email. These digital alerts are generally free for the customer and offer a more streamlined experience.
- Fraud Prevention: To maintain security, the banks have submitted a "safeguard list" which includes measures such as triggering an SMS alert if the volume or value of small transactions surpasses a pre-determined limit, effectively flagging unusual activity.
Currently, the RBI requires banks to register customers for SMS alerts and to send them mandatorily for electronic banking transactions. The ball is now in the RBI's court to assess the banks' request, weighing the desire for customer convenience and operational efficiency against the vital need for financial security.
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