Corrigendum: An earlier headline said transactions up to Rs 3000 can be made with single authentication. However the amount has not yet been fixed by the Reserve Bank of India. The error is regretted
In a major move to simplify payments, the Reserve Bank of India (RBI) will come out with guidelines for single-authentication payment norms for small ticket e-commerce transactions, in a months time. RBI deputy governor H.R. Khan confirmed this to PTI.
Khan said that for transactions perhaps up to Rs 3000 could be under the single authentication but declined to give further details. Currently the RBI insists on two-step authentication when someone uses a card for online purchases. The first authentication is entering the PIN for the card and the second authentication is a one-time password (OTP) which is generated.
The RBI’s insistence on having two-factor authentication forced online cab aggregators such as Uber to migrate to using mobile wallet Paytm to ensure compliance. It is also interesting to note that Uber had sought an extension of 45 days so that it could provide its existing riders sufficient time to switch over to the Paytm wallet powered payment system. The company has said that this additional grace period will ensure that consumers aren’t disadvantaged & will protect Uber’s partner-drivers from sudden drop in volume of business.
It is also interesting to note that the want for more simplified norms have also been coming from banks as the country’s largest lenders State Bank of India and ICICI Bank are preparing to launch near-field communications (NFC) based credit and debit cards which will not require two-factor authentication. Banks on their part hope that this will drive card usage up through low-ticket and high volume transactions.
Other moves by RBI in the payments space
– Earlier this month, the RBI significantly enhanced the norms for pre-paid payment instruments (PPIs) and partly-closed PPIs limits has been raised to Rs 1 lakh. In addition the RBI also introduced two new categories of wallets which allow cash withdrawals.
– The RBI also finalized its guidelines for payments banks which allows Pre-paid Payment Instrument (PPI) issuers, Non-Banking Finance Companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives to apply for a licens eas promoters.
– The RBI also has come with guidelines for a unified bill payments system in India called the Bharat Bill Payment System.