In a move that could provide a major fillip to the fledgling e-commerce industry, including travel portals, the Reserve Bank of India is considering doing away with the two-step verification for online transactions below ₹3,000.
Currently, users are required to give a one-time password (OTP) or use the 3D secure system before making any purchases online. The central bank is expected to come out with fresh guidelines on online-related transactions soon.
According to sources, the RBI is also looking at making EMV-enabled credit/debit cards mandatory for online transactions. EMV, or Europay MasterCard and Visa, chip technology is more secure and safer than the magnetic strip. This has already been rolled out by the banks for offline transactions.
Online transactions through EMV payment cards are popular in the US as they enable powerful CNP (card-not-present) fraud solutions.
Bipin Preet Singh, founder of mobile wallet MobiKwik, said the two-step verification, which was made compulsory for all online transactions, was a deterrent for merchants and shoppers. “While I think the RBI will do away with 3D secure verification, people would still have to type their CVV details. This will be for low-ticket transactions of about ₹1,000 to ₹3,000,” Singh said.
The fresh guidelines are likely to boost e-commerce-related transactions by 15-20 per cent as more people would find it convenient to use their cards online. At present, about 10-15 per cent of the online transactions fail due to wrong or no password.
Recently, the RBI Deputy Governor HR Khan, said “e-commerce is innovative and cannot be pushed away”.
He said some guidelines are required to monitor the entire online payment system. However, he did not clarify if the issues were related to card-not-present frauds or thefts. According to industry data, such frauds are negligible at 0.2-0.5 per cent.
Tech investment neededWhile industry players feel that e-commerce companies will gain from the new guidelines, the firms would also soon need to invest more in technology to identify fraud issues as they would become more liable in case of any fraud.
“E-commerce companies will need to work closely with their payment partners such as Paytm, MobiKwik and FinoTech to assess the accuracy and risk of frauds now,” said Vijay Shekhar Sharma, founder of digital wallet Paytm.