India’s digital payment landscape is set for a major upgrade with the Reserve Bank of India’s (RBI) announcement of new guidelines aimed at strengthening the security of digital transactions. Starting from April 1, 2026, the central bank will allow financial institutions to adopt risk-based authentication checks, supplementing the existing two-factor authentication. This move is expected to enhance the overall security of digital payments while reducing friction for users.
The RBI’s new framework focuses on enabling issuers to assess the risk of individual transactions and apply additional checks based on that risk. For instance, transactions deemed higher-risk, such as large amounts or international payments, will be subject to more stringent verification. On the other hand, low-risk transactions will continue to benefit from the ease of two-factor authentication, streamlining the user experience.
A significant feature of the new guidelines is the flexibility it introduces for issuers to use advanced, emerging technologies for authentication. While traditional methods, such as SMS-based one-time passwords (OTPs), remain available, institutions can explore more innovative solutions like biometric authentication or AI-driven fraud detection. This opens the door for the further evolution of India’s digital payment infrastructure, enabling faster, more secure transactions.
Furthermore, the RBI’s guidelines also include provisions for card issuers to implement additional checks for cross-border and non-recurring transactions. These measures are aimed at strengthening security for international payments, ensuring that fraud prevention standards are maintained even when dealing with foreign merchants and acquirers.
These new regulatory measures come at a crucial time as India’s digital payment ecosystem continues to grow at an exponential rate. With the rapid adoption of online transactions across various sectors, the need for robust security mechanisms has never been more pressing. By fostering a balance between security and user experience, the RBI is not only improving consumer trust but also encouraging innovation within the digital payments sector.
As the industry adapts to these changes, financial institutions will need to integrate these new guidelines seamlessly into their systems, ensuring that the benefits of advanced security measures do not come at the cost of user convenience. The shift towards risk-based checks signals a new era for digital payments, where security and innovation go hand in hand.
