Starting April 1st, the way people make digital payments will change. The Reserve Bank of India has decided to introduce new regulations to reduce fraud. This step has been taken because digital transactions are growing rapidly, and so are the cases of fraud. If you use UPI, net banking, or mobile wallets, the payment process will be slightly different.

The RBI has now mandated two-factor authentication (2FA) for all digital transactions. Simply put, completing any online payment requires verifying your identity in two separate steps. Previously, many platforms allowed payments with just one click or a PIN.

What is two-factor authentication?
RBI has mandated two-factor authentication for digital payments. This will include at least one dynamic factor, such as a one-time password (OTP), biometric verification (such as a fingerprint), or device-based authentication. This means that each transaction will require a unique code, or security step, that will be generated instantly and cannot be reused.

What are the benefits of 2FA?
Previously, many people used the same PIN for multiple transactions, making it easy for hackers to exploit it.

With 2FA, a new security code is generated each time. Even if someone knows your password or PIN, they won't be able to complete the transaction without a second verification step. This makes payments more secure.

What options will users get?

Banks and fintech companies now offer multiple authentication options, allowing users to choose what works best for them.

Some options include:

OTP + PIN
Biometric Verification + Device Binding
Token-Based Authentication + Password

Will banks be responsible in case of fraud?

If the bank or service provider fails to comply with these rules, they will be solely responsible. However, if the user makes a mistake, such as sharing an OTP or PIN, the user will be held responsible.

PC: News24online