RBI issues new rules for authentication of digital payments

The Reserve Bank of India (RBI) has released the Authentication Mechanisms for Digital Payment Transactions Directions, 2025. The rules will take effect from April 1, 2026, and apply to all payment providers, including banks and fintech firms.

At present, digital payments in India rely mainly on SMS-based OTPs. The new rules expand authentication options to include biometrics, device-based tokens, and passphrases. Every transaction must have at least two distinct factors of authentication, and one must be dynamic, unique to that transaction.

The RBI…