Reserve Bank of India (RBI) Governor Shaktikanta Das announced the launch of guidelines for a principle-brd framework aimed at enhancing the security of digital payment transactions.
During the monetary policy committee briefing, Das underscored the importance of prioritizing the security of digital payments, particularly emphasizing the need for additional factor authentication (AFA).
"To promote the adoption of these alternative authentication methods and enhance the security of digital payments, a principle-brd framework for authentication is proposed," stated Das.
While the RBI did not specify a particular mechanism, SMS-brd OTP has gained traction over the years as a form of additional authentication. With advancements in technology, alternative authentication methods have emerged.
Additionally, the RBI is proposing to streamline the onboarding process for Aadhaar-enabled Payment System (AEPS) service providers, such as business correspondents, and implement measures for fraud risk management. These initiatives aim to bolster the efficiency and security of the AEPS system.
The RBI has been closely monitoring the rapid growth of Unified Payments Interface (UPI) in the digital payments landscape. Last September, K Vijayakumar, the general manager of RBI's Department of Payment and Settlement Systems, stressed the necessity of increased investments in the digital payment industry to promote competition and innovation.
In a move to further promote digital payments, the Union government allocated incentives totaling INR 1,441 crore for the fiscal year 2023-24 (FY24). These incentives, announced in the interim Budget 2024, were earmarked for advancing RuPay debit cards and low-value BHIM-UPI transactions (person-to-merchant).
The focus on ensuring a secure digital transaction ecosystem is crucial in today's landscape, with significant progress made through government initiatives, policies, and technological innovations. The Union Budget's emphasis on a risk-brd KYC approach, particularly for higher-risk merchants, reflects a proactive stance in enhancing e-KYC security and efficiency.
Indian fintech companies are leveraging advanced technologies such as contactless payments and tokenization to enhance data protection, contributing to the ongoing efforts to fortify the security of digital transactions.