Experts hail RBI’s digital payment authentication overhaul as a leap toward secure, risk-based transaction ecosystem

India’s digital payments landscape is set for a major transformation as the Reserve Bank of India (RBI) rolls out its new authentication framework, effective April 2026. The overhaul, announced through the Digital Payment Transactions Authentication Directions, 2025, mandates dynamic, two-factor authentication for all digital transactions, moving beyond the long-standing reliance on SMS-based OTPs. Experts across banking, fintech, and cybersecurity sectors have welcomed the move, calling it a “timely upgrade” aligned with global best practices and India’s evolving digital economy.

The RBI’s new guidelines aim to address rising fraud risks, especially in card-not-present and cross-border transactions, while enhancing consumer trust and institutional accountability. The framework introduces risk-based authentication models, mandates real-time validation, and encourages the use of biometric, device-based, and behavioral signals to secure payments.

RBI’s 2025 Authentication Framework – Key Highlights

The RBI has clarified that verifying the same knowledge factor twice (e.g., password + PIN) does not qualify as two-factor authentication. Instead, issuers must combine factors from at least two of the following categories: something the user knows (password/PIN), something the user has (card/device token), and something the user is (biometric identifier).

Authentication Factor Categories – RBI’s Mandated Combinations

Industry leaders have lauded the RBI’s shift toward layered, adaptive security. Bhavik Koladiya, CEO of OTPless, said, “This is a long-awaited clarification. OTPs alone are no longer sufficient. With technologies like Silent Network Authentication, passkeys, and SIM-based verification, the RBI’s move is both progressive and necessary.”

The guidelines also empower issuers to adopt contextual and behavioral checks, such as device fingerprinting, geolocation, and transaction history, especially for high-value or unusual transactions. This flexibility allows banks and fintechs to scale security dynamically, reducing friction for low-risk payments while tightening controls where needed.

Risk-Based Authentication – Transaction-Level Security Parameters

The RBI has also directed issuers to explore DigiLocker integration for secure notifications and confirmations in high-risk transactions. For cross-border payments, especially those initiated by overseas merchants, card issuers must implement risk-based mechanisms and validate non-recurring card-not-present transactions from October 2026.

Cybersecurity experts believe the overhaul will significantly reduce vulnerabilities like SIM swap frauds, OTP interception, and phishing attacks. “Static methods are easy to exploit. Dynamic, multi-layered authentication is the future,” said Ritesh Bhatia, a Mumbai-based cybercrime investigator.

However, banks and payment providers face implementation challenges, including infrastructure upgrades, biometric system deployment, and interoperability standards. The RBI has made it clear that non-compliance will result in full customer compensation in case of fraud, placing direct accountability on issuers.

Challenges for Issuers – Implementation Roadmap

Consumer groups have welcomed the RBI’s move but cautioned against over-complicating everyday payments. “Security must not come at the cost of usability. The RBI’s risk-based model is a good balance,” said Nidhi Sinha, editor of a leading personal finance magazine.

The overhaul also aligns India’s payment security standards with global benchmarks, including PSD2 in Europe and NIST guidelines in the US. By mandating transaction-specific authentication, India joins a growing list of economies prioritizing zero-trust architecture in financial systems.

Social media platforms have responded positively, with hashtags like #RBIAuthentication2025, #SecurePaymentsIndia, and #DigitalTrust trending across Twitter/X, LinkedIn, and YouTube. Fintech influencers and digital security advocates have begun creating explainer content to help users understand the upcoming changes.

Public Sentiment – Social Media Buzz on RBI’s Authentication Overhaul

The RBI has given issuers until April 2026 to fully implement the new framework, with cross-border card-not-present rules kicking in from October 2026. The regulator is expected to release a compliance checklist and conduct quarterly reviews to ensure readiness.

In conclusion, the RBI’s digital payment authentication overhaul marks a decisive step toward securing India’s fast-growing digital economy. By mandating dynamic, risk-based, and multi-factor authentication, the central bank is not only protecting consumers but also reinforcing trust in digital transactions. As issuers gear up for implementation, the success of this framework will depend on balancing security with seamless user experience.

Disclaimer: This article is based on publicly available RBI circulars, verified media reports, and expert commentary. It does not constitute financial or legal advice. Readers are advised to follow official updates from the Reserve Bank of India and their respective banks for accurate implementation timelines and compliance details.