The Reserve Bank of India has released updated digital authentication guidelines for card transactions, emphasizing flexibility, security, and accountability. While SMS-based OTP remains valid, issuers can now integrate additional risk-based authentication factors depending on the perceived fraud risk of a transaction.
These guidelines are significant for two main reasons: Strengthening security in digital payments: The mandate to validate Additional Factor of Authentication (AFA) for non-recurring cross-border Card Not Present transactions enhances protection for international payments. This step ensures that Indian users and merchants are better shielded against fraud, especially as global digital commerce grows. By supporting open access to authentication technology across payment platforms, the framework allows issuers and fintechs to experiment with evolving security solutions. This flexibility not only improves the user experience but also promotes healthy competition among payment providers.
The guidelines also define clear responsibilities for issuers, enhancing accountability in the digital payments’ ecosystem. With an implementation deadline of April 1, 2026, all regulated entities have time to adapt while ensuring compliance.
By combining security, convenience, and technological flexibility, it aligns India with global best practices while fostering a safer environment for online transactions.
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