Legal Challenges in Protecting the Rights of Digital Payment Instrument Users: The Case of Mongolia

Abstract

The rapid expansion of digital payment services has transformed financial transactions by making payments faster, more convenient, and accessible to a wider population. However, the increasing use of mobile banking, electronic money, digital wallets, QR-code payments, and other electronic payment instruments has created new challenges for consumer protection. These include unauthorized transactions, payment fraud, misuse of personal data, service interruptions, insufficient disclosure of information, and difficulties in recovering lost funds. Such developments raise concerns about whether existing legal frameworks provide adequate protection for users of digital payment services. This article examines the legal challenges associated with protecting the rights of digital payment users in Mongolia, drawing on selected regulatory approaches from Singapore, India, and China. The study adopts a doctrinal and comparative legal research approach, based on an analysis of relevant legislation, regulatory instruments, and scholarly literature. It examines Mongolia’s Law on the National Payment System, which establishes the legal foundations for protecting payment users, ensuring the security and reliability of payment systems, and supervising payment service providers. The analysis also considers the extent to which the existing framework addresses practical issues, particularly liability for unauthorized transactions, fraud reporting and investigation, complaint handling, personal data protection, and access to effective remedies. The comparative analysis highlights several regulatory approaches that may offer useful lessons for Mongolia. These include Singapore’s risk-based regulatory framework and consumer protection guidelines, India's rules governing customer liability for unauthorized electronic banking transactions, and China's licensing and supervisory requirements for non-bank payment institutions. The study argues that Mongolia should strengthen the implementation of its existing legal framework by introducing clearer rules on customer liability, standardized complaint-resolution procedures, timely reimbursement mechanisms, stronger disclosure requirements, and more coordinated regulatory supervision. These measures would help improve legal certainty, enhance consumer confidence in digital payment services, and support the sustainable development of Mongolia’s digital financial environment.