Online Payments: The new financial year is set to commence on April 1st, bringing with it several significant changes. In fact, major changes often tend to take effect on the first day of any given month. April, being the first month of the new financial year, typically witnesses the implementation of numerous substantial changes. Starting from this day, modifications to financial regulations are set to take place.
Are you aware that some crucial changes regarding online payments are about to be introduced? The Reserve Bank of India (RBI)—the apex body responsible for issuing directives to all banks—has formulated a new set of stringent regulations. These rules have been designed specifically to provide enhanced protection for your money against fraudulent activities. Under the RBI’s new framework, a two-factor verification process will become mandatory for online payments. Consequently, relying solely on a single password or the traditional One-Time Password (OTP) will no longer suffice.
Discover the Changes Awaiting Users
According to the Reserve Bank of India’s new regulations, every digital payment transaction will require verification through at least two distinct methods. One of these verification methods must be “dynamic” in nature. Examples of such methods include Mobile PINs, UPI PINs, Fingerprint scans, Face IDs, Dynamic OTPs, Passwords, and various Biometric authentication techniques.
Verification checks may be less rigorous for routine payments involving small amounts. Conversely, additional verification protocols will be imposed on transactions involving large sums or those deemed suspicious. This approach is also referred to as “Risk-Based Authentication.” Until now, most users have managed their transactions primarily using just an OTP and a PIN. While the average user may not perceive significant changes initially, these regulations will henceforth be applied uniformly across the entire financial ecosystem. Users will not be eligible for any exemptions or waivers regarding these requirements.
Identify Which Digital Payment Methods Will Be Subject to These Rules
According to media reports, these new regulations are expected to apply to all forms of digital payments conducted within the country. Specifically, they will apply to digital payment channels such as UPI, Card transactions, Net Banking, and Prepaid Payment Instruments (PPIs). Furthermore, for payments made via international websites or applications, these regulations are scheduled to come into effect starting October 1, 2026.
According to the RBI, while the volume of digital payments is expanding rapidly, there has been a corresponding surge in instances of fraud and cyber-hacking. In this context, the traditional SMS-based OTP is no longer considered secure, as hackers can now intercept or compromise it with relative ease. Consequently, it has become imperative to establish a robust and fortified framework for financial security. Consequently, the new regulations are expected to reduce phishing, unauthorised transactions, and online fraud.
What about Suspicious Transactions?
Furthermore, the scope will not be limited solely to 2FA. If a payment appears suspicious to you, the bank or payment service provider will be able to investigate it. This investigation will involve examining factors such as the source of the payment, the device being used, the nature of the spending pattern, and the history of previous transactions.
