Online Dispute Resolution for Failed Digital Transactions: The Way Forward?

Niranjan Kumar, 3rd Year BA LLB (Hons.), School of Law, Christ (Deemed to be University)

The Settlement Table
3 min readJun 16, 2021

The Covid 19 pandemic devastated many industries and forced several industries to pivot from their existing model to survive in a world where the ‘new normal’ includes social distancing, lock downs, and complete avoidance of any physical contact to avoid transmission of the virus.

One such industry is Finance, which was forced to adapt, and some might say accelerate the inevitable Digital change due to the pandemic. Not only were banks disallowed to function normally, but the rise of Digital Payment Systems using the Unified Payments Interface increased manifold to replace cash transactions that could aid in transmitting the virus.

Considering the mounting concerns with different digital payments, The Reserve Bank of India (RBI) created the Online Dispute Resolution (ODR) mechanism for digital payments in its Statement on Developmental and Regulatory Policies through a notification dated August 06, 2020.Legally, the directive is issued by the Reserve Bank in accordance with Section 10(2) and Section 18 of the Payment and Settlement Systems Act 2007.

The notification is in pursuance of the Payment and Settlement Systems in India: Vision 2019- 2021,an RBI policy issued with the primary goal of providing every user with easy access to digital payment options that are quick and affordable. As per RBI, the payment system vision “highlights the need for technology-driven, rule-based, customer-friendly and transparent dispute redressal systems.”

All types of transactions mentioned in the RBI notification dated 20 September 2019 on “Harmonization of Turnaround Time and Customer Compensation for Failed Transactions using Authorized Payment Systems” will be covered by the ODR system.

Some examples include UPI grievances where an account is debited, but the beneficiary account is not credited or debited without transaction confirmation at the merchant location. IMPS transactions with similar problems as well as Card to Card digital transfers are transactions that can now be solved with Online Dispute Resolution.

Upholding the principles of ADR? Some takeaways from the notification:

Customers are to be provided with a diversity of channels to lodges their grievances as mandated by the RBI; these channels include but are not restricted to mobile applications, call centers, complaint centers at branches and offices, and SMS facility. In addition, with specific reference to the ODR system, third-party app providers using UPI are to provide customers an option to lodge grievances within the same app, which will be integrated with the ODR system, ensuring accessibility, a pillar of Alternative Dispute Resolution.

Another critical aspect of ADR is ensuring speedy and efficient resolution, the notification mandates that once a unique reference number is allotted to the grievance, it must be solved within one month, failing which, the customer may approach the respective Ombudsman. The Ombudsman Scheme for Digital Transactions, 2019, is already in existence. It is a quick and cost-free apex-level process for resolving complaints involving digital transactions. Thus, consumers have a backup option should ODR fail.

Lastly, keeping true to the principles of ADR, which enables ease of dispute resolution, the RBI has not only mandated the requirement of only the minimum necessary details from the consumers but also a facility to track the status of the grievance for the consumer.

Thus, we see that this system’s primary objective is to create a dispute resolution system that is transparent and unbiased and delivers redress for customer grievances with little or no human intervention. The system is in place since January 1st, 2021, which was the last date given for Payment System Operators to comply. However, the practicalities and ground realities of the system and its functioning are still in a nascent stage and will therefore be required to be addressed by the RBI as and when developments occur. ODR is indeed the way forward.

‘The Settlement Table’ offers a wide variety of services to resolve your disputes online with the help of the Expert Panel. To know more about how to resolve your legal disputes online, book a free appointment by, signing up in or writing to



The Settlement Table

We are a team of young professionals providing dispute resolution services at low cost and in a time-bound manner, with the help of technological advancements.