RBI introduced an additional authentication layer for online international digital payments

Current Context: The Reserve Bank of India (RBI) introduced an Additional Factor of Authentication (AFA) for online international digital payments on February 7, 2025.

• Detailed Explanation:
• Purpose: The RBI introduced AFA to enhance the security of cross-border transactions. This measure aims to provide the same level of security for international transactions as is available for domestic payments.
• Implementation: The AFA requires an extra layer of verification, such as a One-Time Password (OTP) or biometric authentication, for online international transactions.
• Rationale: The decision was driven by the increasing sophistication of cyber threats and the surge in digital frauds. By extending AFA to international transactions, the RBI aims to protect Indian cardholders from potential fraud risks when shopping from overseas merchants.
• Impact: This move is expected to boost consumer confidence in making international online payments, knowing that their transactions are safeguarded with an additional layer of security.

Question:

1. What is the primary purpose of the RBI introducing Additional Factor of Authentication (AFA) for online international digital payments?

• A) To promote the use of international payment gateways
• B) To enhance the security of cross-border transactions
• C) To encourage cashless transactions within India
• D) To eliminate transaction fees for international payments

Answer: B) The RBI introduced AFA to enhance the security of cross-border transactions. This measure aims to provide the same level of security for international transactions as is available for domestic payments.