Reserve Bank of India has shared the news of bringing changes in the authentication process and one-time password (OTP) system for digital transactions. With this announcement made along with the decisions of the Monetary Policy Committee i.e. MPC, this proactive step has been taken by the central bank towards strengthening the security of digital payments.
Let us tell you that SMS-based OTP has been widely adopted in recent years. In this way, the RBI wants to introduce a principles-based system to accommodate alternative authentication methods, which aims to strengthen the security of digital payments.
What is OTP based system? (What is OTP based system?)
While doing online transactions, you receive OTP through SMS. The recipient will have to enter this OTP within the stipulated time. This SMS-based authentication method has been adopted by financial institutions for years. With the increasing trend of digital transactions in the country, the Reserve Bank of India (RBI) is motivating banks to adopt state-of-the-art authentication solutions to increase both security and convenience for customers.
Fraud in more than 95,000 UPI transactions!
Let us tell you that in March 2023, the central bank registered more than 95,000 cases of fraudulent UPI transactions between 2022 and 2023. In response to these challenges, the principles proposed by RBI will empower regulated entities to avail alternative methods of authentication. Which includes app-based approval and biometric authentication.
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