In an effort to boost plastic money and transactions through digital modes, Reserve Bank of India has relaxed 2-step authentication for transactions up to Rs.2000. With liquid cash been largely unavailable,urban middle-class Indian is forced to transact using credit or debit card. Demonetization, thus has benefited digital wallets, e-commerce, startups involved in digital payment services/solutions, startups focusing on development of UPI mobile Apps etc.
Earlier, while carrying out any online transaction in Indian currency, banks had to send an one time password(OTP) on customer’s registered mobile number to carry out that particular transaction using his or her credit or debit card. This step taken by RBI earlier was appreciated by masses as it reduced online frauds to a greater extend. Transactions made by simply entering card details in very risky especially in India where the whole credit/debit card ecosystem is not so well developed as compared to countries like United States.
To some extent, 2-step authentication is irritating especially when you do not have your mobile phone handy with you or you do not have it with you while carrying out the online transaction. Some banks do provide an alternative solution such as ‘verified visa’ or master card password in case you do not have your mobile phone with you. But not all banks in India provide such an alternative option. Also sometimes, it takes too long for receiving OTP on your mobile due carrier congestion issues or if you happen to be located in a remote location where mobile network is not available or signal strength is very week, you simply cannot carry out the transaction at that time.
Relaxing this additional security requirements in order to prevent online frauds up to Rs.2000 will have a positive impact on the usage of credit and debit cards for online shopping, online bill payments, Railway ticket bookings etc. However, its too early to comment on pros and cons of this move by RBI as it risks online frauds via credit and debit cards but at the same time boosts the use of plastic money with much ease and convenience.