{"id":1300722,"date":"2025-09-27T08:56:02","date_gmt":"2025-09-27T03:26:02","guid":{"rendered":"https:\/\/trak.in\/stories\/?p=1300722"},"modified":"2025-09-27T09:00:11","modified_gmt":"2025-09-27T03:30:11","slug":"rbi-mandates-additional-security-steps-beyond-otps-for-digital-payments","status":"publish","type":"post","link":"https:\/\/trak.in\/stories\/rbi-mandates-additional-security-steps-beyond-otps-for-digital-payments\/","title":{"rendered":"RBI Mandates Additional Security Steps Beyond OTPs For Digital Payments"},"content":{"rendered":"\n

In a major step to enhance the security of India\u2019s fast-growing digital payments ecosystem, the Reserve Bank of India (RBI)<\/strong> has announced new guidelines mandating additional risk-based authentication measures<\/strong> beyond the current two-factor standard. The new rules, issued under the Authentication Mechanisms for Digital Payment Transactions Directions, 2025<\/em>, will come into effect from April 1, 2026<\/strong>.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Beyond Two-Factor Authentication<\/h3>\n\n\n\n

While two-factor authentication (2FA) \u2014 often involving passwords and OTPs \u2014 remains mandatory for all digital transactions, the RBI now requires extra layers of security<\/a><\/strong> based on the fraud risk perception<\/strong> of each transaction. Issuers will need to implement risk-based checks that consider parameters such as transaction location, device attributes, user behaviour patterns, and transaction history<\/strong>.<\/p>\n\n\n\n

Importantly, at least one authentication factor must be dynamically generated or unique to each transaction<\/strong>, ensuring that even if one factor is compromised, the second remains secure.<\/p>\n\n\n\n

Broader Coverage and Cross-Border Transactions<\/h3>\n\n\n\n

The new directions apply to all domestic digital payments<\/strong> and require payment system providers and participants<\/strong> \u2014 including banks, non-banks, and fintech companies \u2014 to adhere to stricter authentication protocols.<\/p>\n\n\n\n

Additionally, card issuers must now validate Additional Factor of Authentication (AFA)<\/strong> for non-recurring cross-border card-not-present (CNP) transactions<\/strong> when requested by the overseas merchant or acquirer. This aims to enhance security for online international transactions conducted using Indian-issued cards.<\/p>\n\n\n\n

Interoperability, Tokenisation, and New Tools<\/h3>\n\n\n\n

RBI has also stressed the need for interoperability and open access<\/strong> to authentication technologies. System providers must offer tokenisation and authentication services<\/strong> that are compatible across platforms and applications.<\/p>\n\n\n\n

Issuers are encouraged to explore new tools \u2014 including DigiLocker notifications<\/strong> \u2014 for additional verification in high-risk transactions. These dynamic checks will add an extra layer of protection without compromising user convenience.<\/p>\n\n\n\n

Accountability and Customer Protection<\/h3>\n\n\n\n

The central bank has made it clear that if any fraudulent transaction occurs due to non-compliance with the new authentication guidelines, issuers will be liable to fully compensate customers<\/strong>. All participants must also ensure compliance with the Digital Personal Data Protection Act, 2023<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a major step to enhance the security of India\u2019s fast-growing digital payments ecosystem, the Reserve Bank of India (RBI) has announced new guidelines mandating additional risk-based authentication measures beyond the current two-factor standard. The new rules, issued under the Authentication Mechanisms for Digital Payment Transactions Directions, 2025, will come into effect from April 1, […]<\/p>\n","protected":false},"author":30,"featured_media":1300733,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[145,185],"class_list":["post-1300722","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-digital-payments","tag-rbi"],"acf":[],"yoast_head":"\nRBI Mandates Additional Security Steps Beyond OTPs For Digital Payments - Trak.in - Indian Business of Tech, Mobile & Startups<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/trak.in\/stories\/rbi-mandates-additional-security-steps-beyond-otps-for-digital-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RBI Mandates Additional Security Steps Beyond OTPs For Digital Payments - Trak.in - Indian Business of Tech, Mobile & Startups\" \/>\n<meta property=\"og:description\" content=\"In a major step to enhance the security of India\u2019s fast-growing digital payments ecosystem, the Reserve Bank of India (RBI) has announced new guidelines mandating additional risk-based authentication measures beyond the current two-factor standard. 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