Mint Explainer: How additional factor authentication will secure online international payments

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Subscribe to enjoy similar stories. MUMBAI : In a significant move to strengthen the digital payment security framework, the Reserve Bank of India (RBI) has proposed to enable additional factor authentication (AFA) for international card-not-present (CNP) transactions. The move aims to provide Indian consumers with an additional layer of security when dealing with foreign merchants, ensuring a safety net comparable to domestic transactions, where additional factor authentication is already mandatory.

The RBI will soon issue a draft circular to invite feedback from stakeholders. Instances of fraud in international card transactions typically involve unauthorized charges made on foreign websites where minimal authentication is required. This has exposed Indian cardholders to risks, particularly in scenarios where merchants do not verify key details such as CVV numbers or where recurring payments are set up without additional security checks.

Experts believe that enabling AFA for such transactions will act as a critical safeguard for customers. “By introducing AFA for international card-not-present transactions, the RBI is adding an extra layer of security that can help prevent unauthorized transactions," said Adhil Shetty, chief executive, BankBazaar.com. Currently, many banks disable international transactions by default for newly issued cards.

Users must manually enable them if they wish to use their cards for cross-border payments. Despite this safeguard, fraudulent activities can still occur due to the lack of multi-factor authentication on foreign websites. Real-time transaction alerts and stringent security protocols help reduce the risk, but additional measures like AFA will significantly enhance protection.