Credit Cards And Electronic Payment Systems In India: A Critical Legal, Regulatory And Consumer Protection Analysis
- IJLLR Journal
- Jul 8
- 2 min read
Aarushi Rajpurohit, NIMS School of Law, NIMS University, Jaipur
ABSTRACT
The migration of India's payments architecture from cash and cheque-based settlement to card-based and application-driven electronic transfer is among the more consequential legal developments of the last two decades, yet the statutory response to it remains scattered across instruments that were not written with this migration in mind. This article undertakes a comprehensive doctrinal examination of the legal, regulatory and consumer-protection dimensions of credit card and electronic payment systems in India. It situates credit card transactions within contract law, tracing the tripartite (and increasingly multi-party) relationship among issuing banks, acquiring banks, payment networks, merchants and cardholders, and shows how doctrines of unconscionability, fiduciary duty and standard-form contracting continue to structure liability even as the mode of transacting has changed beyond recognition. It then maps the layered regulatory architecture built around the Payment and Settlement Systems Act, 2007, the Information Technology Act, 2000, and the extensive circular-based rule-making of the Reserve Bank of India, arguing that this architecture, while functionally adequate for day- to-day supervision, lacks the codified clarity that a mature payments economy requires. The article devotes particular attention to consumer protection, examining the zero- and limited-liability framework for unauthorised transactions, the expanding judicial reading of "service" under the Consumer Protection Act, 2019, and the practical shortcomings of grievance redressal in a system where disputes are technologically opaque to the very consumers it protects. A dedicated discussion of data protection, privacy and cybersecurity follows the recognition of informational privacy as a facet of Article 21 in Justice K.S. Puttaswamy v. Union of India, and considers what that recognition demands of a payments ecosystem still without a fully operative, sector-specific data protection regime. A comparative section draws lessons from the codified consumer-finance statutes of the United States and the open-banking, GDPR-integrated model of the United Kingdom, before the article closes with a set of specific, implementable recommendations directed at legislative consolidation, strengthened enforcement, standardised disclosure and cybersecurity baselining. The central argument is that Indian law has kept pace with the payments revolution operationally but not architecturally, and that the next phase of reform must be aimed at coherence rather than mere expansion.
Keywords: Credit Cards; Electronic Payment Systems; Reserve Bank of India; Consumer Protection Act, 2019; Data Privacy; Cybersecurity; Payment and Settlement Systems Act, 2007; FinTech Regulation.
