RBI intends to replace OTPs with new technology to curb digital frauds | Details inside

RBI is set to revolutionize digital security by phasing out OTPs and embracing advanced authentication methods. Amid regulatory actions against Paytm, competitors observe a surge in app downloads, marking a pivotal moment in India's digital payment landscape.

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The Reserve Bank of India (RBI) is considering implementing advanced technology to replace one-time-passwords (OTPs) in a bid to tackle the escalating digital scams. The initiative comes amidst growing concerns over the vulnerability of OTPs to exploitation by scammers in India's digital payment landscape.

Recognizing the critical need to bolster security, the RBI aims to adopt authentication apps or biometric sensors embedded within smartphones. This strategic move is poised to mitigate risks associated with SIM swapping and unauthorized access to user devices.

In line with this vision, the RBI plans to phase out SMS-based OTP transactions, thereby empowering users with enhanced control over their digital payments. This transition is anticipated to raise the bar for security standards, rendering it more challenging for malicious actors to circumvent protective measures.

Drawing inspiration from successful implementations in other sectors, such as X (formerly Twitter), which has already transitioned to authentication apps, the RBI envisions adopting Multi-Factor Authentication (MPIN), akin to UPI payments.

However, this transition presents its own set of challenges, particularly concerning the inclusivity of users with feature phones that lack support for authentication apps. Therefore, the RBI is tasked with ensuring a seamless transition that accommodates users across various technological spectrums.

Also Read: Paytm To Conclude Loan Disbursement Suspension By February 14

While specifics regarding the timeline and implementation remain undisclosed, it is evident that the RBI is steadfast in its commitment to fortify digital security measures. The overarching goal is to strike a delicate balance between stringent security protocols and accessibility for all users.

In parallel developments, Paytm Payments Bank has recently faced regulatory actions, with the RBI instructing the cessation of new deposits or top-ups in customer accounts, wallets, or FASTags after February 29, citing non-compliance.

As a consequence, competitors of Paytm have witnessed a surge in app downloads, as per a report by Moneycontrol, signaling a shifting landscape in India's digital payment sphere. Names such as PhonePe, Google Pay, and NPCI's BHIM app have notably experienced an influx of new users from the Google Play store.