8 Dec 2016

Rishabh Tripathi

RBI Mulls Additional Factor Authentication For Online Card Transactions

In a bid to smoothen and ease the ongoing drive towards demonetisation and to make online payments less time consuming RBI has relaxed the two step authentication for online card transactions involving sums of up to Rs 2000.


The current process takes a lot of effort and is quite time consuming . For online transactions involving a debit/credit card the user is first required to enter the card no. and other card details on merchants payment gateway and then they are required to enter a one-time password ( OTP ) which is sent to their mobile no. and then complete the purchase .But in case of digital wallets like paytm , freecharge or mobikwik there's no such sophistication , here users can make payments without a two factor authentication. so it seems that RBI is trying to provide a level playing field to all the players of payment ecosystem.

Under the current model, the card issuing banks will offer payment authentication solutions of the respective card networks to their customers on an optional basis. Users selecting this facility will have to go through a one-time registration process that would require the entry of card details and Additional Factor of Authentication (AFA) by the issuing bank. Thereafter the registered users will not be required to enter the card details for every transaction at merchant locations which provide these facilities and thus hereby saving effort and time.RBI has mandated that the authorised card networks should provide these payment authentication solutions with participation of card issuing and acquiring banks.
 
RBI has further said to banks/networks /institutions to put a check on how many of such small transactionswill be allowed in a day/week/monts as considered appropiate. 
In the past few months, the RBI has initiated many services to smoothen investments in the country and to support the startup and digital ecosystem of the country. This includes approval to buy mutual funds via e-wallets; Paytm, PayU India, Oxigen to function as a consumer bill payment platform; guidelines  to regulate P2P funding platforms; favouring towards easier exit policy for startups etc.