Michaela
The Reserve Bank of India (RBI) has introduced new regulations aimed at strengthening authentication standards for digital payments, requiring dynamic verification measures and placing greater responsibility on issuers as part of its 2026 mandate to combat rising fraud.
Key points:
- The Reserve Bank of India has mandated dynamic authentication for all digital transactions by April 2026, requiring banks and payment providers to adopt stricter protocols.
- Issuers will be held directly accountable for weak security systems, with mandatory customer reimbursements in cases of fraud linked to non-compliance.
- The framework extends to cross-border “card-not-present” transactions and requires compliance with India’s Digital Personal Data Protection Act, 2023.
On September 25, the RBI issued its Authentication Mechanisms for Digital Payment Transactions Directions 2025, requiring stronger security measures for all domestic digital transactions. Under the mandate, both banks and non-bank payment providers must adopt the new protocols, with full compliance expected by April 1, 2026.
The new framework expands on India’s established two-factor authentication system, introducing stricter safeguards for digital payments. It now requires at least one dynamic authentication factor, such as SMS-based one-time passwords (OTPs), biometric data, or hardware tokens, for every digital transaction, excluding card-present payments. This ensures that credentials are unique to each transaction, reducing the risk of reuse or compromise.
The framework aims to strengthen consumer protection and preserve market integrity while allowing the payments ecosystem to adapt to emerging technologies. It also extends security safeguards to cross-border transactions made with cards issued in India.
Starting October 1, 2026, card issuers must validate non-recurring cross-border “card-not-present” transactions and apply risk-based checks to all such payments in line with anti-fraud standards.
The RBI has made issuers directly accountable for the strength of their authentication systems, requiring them to fully reimburse customers if losses result from non-compliance. In addition, the central bank directed that all authentication measures align with the Digital Personal Data Protection Act, 2023.
Under the new rules, issuers will be held liable for weak authentication systems, with mandatory reimbursement to customers in cases of loss. The RBI further emphasized that all authentication practices must comply with the Digital Personal Data Protection Act, 2023.
How India’s Digital Payments Overhaul Could Impact SHIB Holders
India’s tougher digital payment rules could directly impact SHIB holders by reshaping how crypto transactions are secured and monitored. With dynamic verification now mandatory and issuers held accountable for lapses, the framework signals closer oversight of digital finance, including on-ramps and off-ramps used to trade SHIB. This shift could reduce fraud risks tied to compromised accounts and improve the overall safety of fiat-to-crypto transactions.
For SHIB traders and wallet users, the changes may initially add more friction but could ultimately strengthen market confidence. By pushing exchanges and payment providers to align with RBI’s standards, the rules may foster a more secure ecosystem, one where stronger safeguards deter bad actors while supporting wider adoption of digital assets in India.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
