In
a move that will make it easier for cab aggregators like Uber and Ola and other
online merchants to accept cards, the RBI has relaxed two-factor authentication
for online payments below Rs 2,000.
The
RBI's insistence on a second factor authentication (in the form of a one-time
password, or OTP) had prompted cab aggregators to tie up with digital wallets
like Paytm. While customers can even now pay by card, they need to wait for a
text message containing the OTP before concluding the transaction.In future, if
they register with the merchant, they can complete the payment by entering a
password authenticated by the card network.
The
RBI had earlier relaxed the second factor authentication requirement for
transactions in shops using near field communication (NFC) or contactless
cards. According to Vijay Jasuja, MD & CEO, SBI Cards, there had been a
representation from the industry to relax the two-factor authentication norms
for low-value transactions.
Amit
Jain, president, Uber India, said, "This waiver is a big leap in the right
direction to bring ease and convenience to the use of cards over cash and will
strengthen the foundation for a leading digital economy."
In
its circular issued on Tuesday, the RBI said that it has been receiving
requests from certain segments of the industry for reviewing the requirement of
additional factor authentication for low-value online card-not-present (CNP)
transactions. The RBI said that it was not happy with merchant-specific
solutions as an alternative. But a solution by card networks (Visa ,MasterCard,
RuPay) is expected to meet the objective of customer convenience with
sufficient security for low-value transactions.
The
network-provided solutions include Visa Checkout and Mastercard's Masterpass.
Customers opting for this facility will go through a one-time registration
process, requiring entry of card details and additional factor authentication
by the issuing bank. In this model, the card details already registered would
be the first factor while the network-provided password would be the additional
factor of authentication.
"This
is a very elegant solution as it will prevent dropout of transactions without
diluting the security of the payment architecture," said TR Ramachandran,
country head, Visa.
Source :The Economic Times
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