TestCloud
Prep • Practice • Perform
Log In

RBI Issues New Directions to Strengthen Authentication Mechanisms for Digital Payment Transactions.

Banking & Finance | Dated: 29 Sep 2025

In September 2025, the Reserve Bank of India (RBI) released the ‘Reserve Bank of India (Authentication Mechanisms for Digital Payment Transactions) Directions, 2025’ under the Payment and Settlement Systems (PSS) Act, 2007. The new guidelines aim to enhance security in India’s digital payment ecosystem and will be effective from April 1, 2026.

🎯 Key Highlights:

  • - The directions are issued under Sections 18 and 10(2) of the Payment and Settlement Systems (PSS) Act, 2007 (Act 51 of 2007), making them applicable to all Payment System Providers and Participants, including both banks and non-banks.
  • - For digital payment transactions, excluding card-present transactions, at least one factor of authentication must be dynamically created or proven, ensuring an additional layer of transaction security.

💡 Other Important Facts:

  • (i) The issuer of payment instruments must ensure the robustness, reliability, and integrity of the authentication mechanism before deployment to protect customers against fraud.
  • (ii) While not applicable to all cross-border transactions, the RBI has mandated that card issuers implement risk-based mechanisms for handling Card-Not-Present (CNP) cross-border transactions by October 1, 2026.

📚 Test Your Knowledge:

Recently, which institution released the ‘Authentication Mechanisms for Digital Payment Transactions Directions, 2025’?

Correct Answer: RBI

🚀 Quick Recap:

About RBI

  • Governor : Sanjay Malhotra
  • Headquarter : Mumbai