The trend of credit cards has increased a lot these days. There is a reason behind this also. In banking fraud, money is withdrawn from your real account. It is very difficult and takes time to get the money back or it is not received at all. Whereas in credit cards this risk is very less. If you give timely information about the fraud to the bank or the credit card issuing company, then if the case is found true on investigation, you do not need to pay anything. Despite all this, people become victims of credit card fraud. But now the Reserve Bank of India (RBI) is preparing to further strengthen the digital payment system to curb frauds caused by debit and credit cards. RBI has proposed to streamline the onboarding of Aadhaar inbuilt payment system service providers and introduce additional fraud prevention measures.
What is Aadhaar inbuilt payment system?
RBI Governor Shaktikanta Das said that we propose to streamline the process of onboarding Aadhaar Enabled Payment System (AEPS) service providers and introduce additional fraud risk management measures. Aadhaar-enabled payment services (AEPS) is a bank-based model that allows online financial transactions at point-of-sale (POS) and micro ATMs through a business correspondent of any bank using Aadhaar authentication. This removes the need for OTP, bank account details and other financial details.
Although RBI has not prescribed any specific AFA, the payments ecosystem has largely adopted SMS-based One Time Password (OTP). With innovations in technology, alternative authentication mechanisms have emerged in recent years. To facilitate the use of such mechanisms for digital security, it is proposed to adopt a principles-based framework for authentication of digital payment transactions, the RBI Governor said on Thursday. Instructions in this regard will be issued separately. The Aadhaar Enabled Payment System (AEPS) operated by NPCI enables customers to conduct digital payment transactions in an assisted mode. More than 37 crore users conducted AePS transactions in 2023, pointing to the important role played by AePS in financial inclusion.
In December 2023, the National Payments Corporation of India (NPCI) took steps to prevent scammers from misusing customers’ credentials to drain their bank accounts. The payments body asked acquirer banks to allow interoperable AEPS (Aadhaar-enabled payment system) cash withdrawal transactions only after Aadhaar-based biometric authentication of business correspondents (BCs) and agents. Overall, the whole gist is that the new announcements by RBI are aimed at protecting India’s digital payment ecosystem from emerging risks in the future.