Effective April 1, the Reserve Bank of India’s (RBI) new authentication rules regarding digital payments have come into force. With this in mind, Razorpay—a leading player in the fintech sector—has launched a special ‘Biometric Passkey’ feature.
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New Delhi: Starting today (April 1), the Reserve Bank of India’s (RBI) new regulations regarding digital payments have come into effect. The objective of these rules is to enhance the security of online transactions. Going forward, Two-Factor Authentication (2FA) will be mandatory for all online transactions. According to the RBI’s new framework, every digital payment must be verified using at least two distinct methods. This rule applies to all platforms, including UPI, debit cards, credit cards, and mobile wallets.
In tandem with this development, Bengaluru-based digital payments firm Razorpay has launched a new biometric ‘Passkey’ system, which is poised to replace the traditional OTP. This system has been introduced in collaboration with Mastercard, and support for Visa cards is expected to be added soon.
Shashank Kumar, Founder of Razorpay, stated that the company has launched a new system—Passkey—which eliminates the need for an OTP for card payments. This system is fully compliant with the RBI’s Two-Factor Authentication framework.
Now, instead of entering an OTP while making online payments, users will be able to complete transactions using their phone’s fingerprint or facial recognition lock. A key highlight is that the entire verification process will take place directly on your device, eliminating the need for a separate webpage or an OTP.
OTP-Related Issues Cause 95% of Payment Failures
Until now, the OTP system was the most widely used method in India; however, it was plagued by several issues—such as delayed delivery of OTPs, incorrect entry, or session timeouts. Estimates suggest that these very problems were responsible for approximately 35 percent of all payment failures.
Transaction Success Rate Could Reach Up to 95%
The new Passkey system aims to eliminate these issues. The company claims that this could boost the transaction success rate to as high as 95%. Furthermore, this system is also more secure. It ensures that your card details are not shared with any merchant or third party, thereby reducing the risk of fraud.
Over 13,500 Internet Fraud Cases in FY25
In fact, there has been a surge in cases of digital fraud. According to the RBI, over 13,500 internet fraud cases were reported during the financial year 2024-25, resulting in losses exceeding ₹520 crore. Against this backdrop, the new regulations and this technology are being hailed as significant steps toward providing enhanced security to users.
