The National Payments Corporation of India (NPCI) launched biometric authentication for UPI payments on October 7th during the Global FinTech Fest held in Mumbai. This new feature will work through on-device biometric verification and will replace the currently used PIN system. This is considered the biggest security upgrade since the digital payment system was launched in April 2016.

M. Nagaraju M., Secretary, Department of Financial Services, Ministry of Finance, launched the service. According to NPCI, this feature will provide a more seamless, secure, and convenient experience than traditional PIN-based authentication. Some publications previously reported that NPCI was in talks with several startups to integrate this technology into UPI.

Better Security than PIN

Biometric authentication can be used not only for UPI transactions but also for setting or resetting UPI PINs and withdrawing cash from ATMs.

This feature will be available on an opt-in basis, meaning users can activate it for themselves if they wish. According to an NPCI statement, "Every transaction will be individually verified by the issuing bank using cryptographic checks, ensuring the highest level of security and a smooth experience."

Easy for Senior Citizens and New Users

The introduction of a biometric system in UPI payments will simplify onboarding for senior citizens and first-time UPI users.

NPCI explained, "Until now, creating a UPI PIN required debit card details or Aadhaar OTP verification. Now, with Aadhaar-based face authentication, this process will become faster, easier, and possible without a card."

First-factor authentication in UPI is done through SMS verification from a mobile device, while the PIN serves as the second factor.

Security and Fraud Concerns

Although this initiative was launched three years ago, its implementation has now been accelerated due to the RBI's growing concern about UPI scams caused by PIN-related fraud.

RBI has advised all financial institutions to move away from PIN and OTP and adopt new second-factor authentication methods, such as biometrics and behavioral risk patterns, to prevent the growing number of UPI frauds.

Preparations were underway for several years.

In 2021, NPCI organized a hackathon called the PayAuth Challenge, in which startups were asked to develop alternative authentication methods. Winners included Tech5, Juspay, MinkasuPay, and Infobip.

These startups submitted their proof-of-concept (POC). The proposal was presented to the UPI Steering Committee (which includes several banks and UPI apps). Banks preferred MinkasuPay's solution because it didn't require banks to make major changes to their systems.

UPI is currently the most popular digital payment platform in the country, controlling approximately 85 percent of total online transactions. Every month, approximately 20 billion transactions, valued at over ₹25 lakh crore, are completed through UPI.

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