Mumbai
The Reserve Bank of India today proposed adopting a principle-based ‘framework for authentication of digital payment transactions’ to enhance security of such transactions.
The central bank said that it has always prioritised security of digital payments, in particular the requirement of Additional Factor of Authentication (AFA), and has introduced various mechanisms for the same.
While no particular mechanism was specified by RBI, SMS-based OTP has become very popular and has been largely adopted by the payments ecosystem.
“With technological advancements, however, alternative authentication mechanisms have emerged in recent years. Therefore, to facilitate adoption of alternative authentication mechanisms for enhancing the security of digital payments, it is proposed to put in place a principle-based framework for authentication of such transactions,” Governor Shaktikanta Das said in his statement.
“We want to just tell the players in the field that there are other methods also, and RBI will be agnostic to them as long as they are sound methods. Banks and institutions are free to adopt any mechanism,” he added in the policy conference.
“This principle-based approach promises not only enhanced security and efficiency but also greater flexibility for users such as email, WhatsApp and even card grid numbers for AFA. The new framework will streamline user experience while empowering them with choice and convenience,” said Rahul Jain – CFO, NTT DATA Payment Services India.
Ankit Ratan, CEO & Co-founder at Signzy said that rising financial cyber crimes are eroding the digital trust within the ecosystem, with approximately 11 lakh cases of such frauds being registered in 2023 worth around ₹7,488.6 crore.
“By adopting a principle-based framework for authentication, businesses not only curb the financial frauds but will also be able to provide a secure environment for its customers and protect their data,” he said.