Now, pay on Flipkart, Amazon without OTP; RBI’s new rule makes online digital payments easier

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Updated: January 15, 2020 1:11:22 PM

After Flipkart's recent announcement of a new network authentication solution, other e-commerce firms and delivery apps are expected to follow suit, cutting the need for OTPs for low-value transactions.

online shopping, doorstep delivery, Savvy customers, delivery costs, Smart Lockers, inaccurate postal addressIt is expected that the customers may increase small purchases and complete their purchase journey in less time.

After Flipkart’s recent announcement of a new network authentication solution, other e-commerce firms and delivery apps are expected to follow suit, cutting the need for OTPs for low-value transactions. Flipkart’s Visa Safe Click (VSC) removes the need for OTP for transactions up to Rs 2,000 on the e-commerce platform. It’s expected to make online transactions easier and faster and also reduce the steps in the payment system. The RBI, earlier this month, allowed banks to facilitate transactions without OTP for online transactions as long as the merchant can verify the customer. With pre-authorisation, the companies don’t face risks as earlier. It is expected that the customers may increase small purchases and complete their purchase journey in less time. Firms such as Amazon, Uber and others are also expected to move in the direction.

Why is OTP needed?

One of the most significant checkpoints on credit or debit card usage, OTP is sent on the mobile phone number registered with the card. It is also considered as a second later of defense against financial fraud. The customers need to feed in OTP generated by the bank or payment gateway to complete the transaction. There are payment gateways that require 3D Secure PIN in addition to OTP to complete payment.

Meanwhile, the RBI recently introduced Aadhaar-based Video Customer Identification Process (V-CIP) to allow banks and other lenders to remotely complete KYC of customers on video. Lenders can use this facility as an alternative to the already available e-KYC facility. The central bank has amended its guidelines under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 to introduce V-CIP. RBI said in a circular, “…with a view to leveraging the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the Reserve Bank has decided to permit Video-based Customer Identification Process (V-CIP) as a consent-based alternate method of establishing the customer’s identity, for customer onboarding.”

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