While SMS-based One Time Password has been the primary way for authenticating digital transactions, the Reserve Bank of India is looking at other mechanisms in line with technological advancements.
Over the years, the Reserve Bank has prioritised the security of digital payments, in particularly the requirement of an Additional Factor of Authentication (AFA). Though RBI has not prescribed any particular AFA, the payments ecosystem has largely adopted SMS-based One Time Password (OTP).
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“With innovations in technology, alternative authentication mechanisms have emerged in recent years. To facilitate the use of such mechanisms for digital security, it is proposed to adopt a principle-based ‘Framework for authentication of digital payment transactions’. Instructions in this regard will be issued separately,” RBI said in a statement