The Reserve Bank of India (RBI) has released a draft framework on alternative authentication mechanisms to supplement the SMS-based OTP system for digital payment transactions. The draft discusses the Additional Factor of Authentication (AFA), which involves using more than one factor to authenticate a payment instruction. Furthermore, the draft specifies that issuers must obtain explicit consent from customers before enabling any new authentication factor. Customers should also have the option to deregister from using the new authentication method.
RBI has proposed e-mandates for recurring transactions in mutual funds, insurance premiums,
credit card bill payments for values up to Rs 1 lakh and in respect of all other categories for value up to Rs 15,000.
The draft notes that small value card present transactions up to Rs 5000 per transaction in contactless mode at PoS terminals are exempt from the AFA requirement.
The central bank has invited comments and feedback on the draft framework until September 15, 2024.
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