The Reserve Bank of India (RBI) has introduced a new regulatory framework to strengthen digital payment security in the country. From April 1, 2026, two-factor authentication (2FA) will be mandatory for all digital transactions, with exceptions allowed only for certain small-value cases. The guidelines mark a major shift towards advanced, flexible, and secure verification methods, replacing the outdated reliance on SMS OTPs alone.
Key Highlights of the New Norms
Mandatory Two-Factor Authentication
- All digital payments — including UPI, net banking, mobile wallets, and card-based transactions — will now require 2FA, ensuring two independent layers of verification. Small, low-risk transactions may be exempt based on pre-defined thresholds.
Flexible Authentication Methods
Banks and payment service providers will now have multiple options to verify users, including,
- Biometric authentication (fingerprint, facial recognition)
- Device-based tokens or app-linked authenticators
- Passphrases, PINs, or security questions
- Hardware/software-based OTP generators
- Native device security features like facial unlock or fingerprint
These alternatives aim to reduce dependency on SMS OTPs, which are vulnerable to delays, phishing, and SIM-swapping.
Risk-Based Authentication
- Institutions may use risk-based assessment to trigger extra layers of verification for high-value, cross-border, or suspicious transactions.
- This allows adaptive security, improving user experience for low-risk cases while protecting against fraud.
Implementation Timeline
- Effective date for domestic transactions: April 1, 2026
- Cross-border and card-not-present transactions may receive extended deadlines
- A phased rollout will be coordinated with banks and fintech players for smooth adoption
Key Facts
- 2FA becomes mandatory: April 1, 2026
- Applies to: UPI, net banking, cards, mobile wallets, etc.
- Exemptions: Low-value transactions (as defined by RBI)
- Permitted methods: Biometrics, tokens, passphrases, OTPs, app authenticators
- Risk-based checks: Allowed for extra protection on flagged transactions
- SMS OTP: Still allowed as one of the factors
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