RBI introduces extra security for international online payments with AFA
New Delhi, Feb 7, 2025
The RBI plans to introduce Additional Factor of Authentication (AFA) for international online card transactions, enhancing security for cross-border purchases.
In a significant move aimed at enhancing the safety of online payments, the Reserve Bank of India (RBI) on Friday announced plans to introduce Additional Factor of Authentication (AFA) for cross-border "Card Not Present" (CNP) transactions. This decision will bring international digital transactions using Indian-issued cards under the same security standards that have been applied to domestic transactions.
AFA has already become a cornerstone of digital transaction security within India. By requiring an extra layer of verification—such as a One-Time Password (OTP) or biometric authentication—AFA has effectively reduced fraud in domestic online payments. Customers feel more confident making purchases online, knowing that their transactions are safeguarded.
However, until now, this additional security feature did not apply to international transactions, leaving a gap in protection for Indian consumers shopping with overseas merchants. Recognizing this vulnerability, the RBI’s proposed move aims to close that gap and ensure the same level of security for cross-border transactions as Indian consumers enjoy with domestic payments.
Online shopping and digital payments have seen a massive surge in India, with consumers increasingly buying goods and services from international retailers. However, this rise in e-commerce has also brought with it a spike in fraud risks, especially when transactions are conducted outside the country’s regulatory purview. Without AFA in place, these international transactions have remained more vulnerable to cyber threats, creating a need for additional protection for cardholders.
To address this issue, the RBI has decided to extend AFA to cross-border Card Not Present (CNP) transactions, where a physical card is not used, and the transaction takes place over the internet. In these cases, the risk of fraud is typically higher, as there is no physical presence of the cardholder to verify the transaction. The introduction of AFA for international transactions will ensure that Indian consumers are fully protected, regardless of whether they are buying from a local or overseas merchant.
"In order to provide a similar level of safety for online international transactions using cards issued in India, it is proposed to enable AFA for international card not present (online) transactions as well. This will provide an additional layer of security in cases where the overseas merchant is enabled for AFA. Draft circular will be issued shortly for feedback from stakeholders," the RBI said in a statement.
For Indian cardholders, this move means that when they make purchases from international merchants, an additional layer of security will be required. This could include verifying the transaction via OTP sent to the cardholder’s registered mobile number or through biometric authentication, ensuring that the person making the purchase is indeed the cardholder.
[The Business Standard]
