Argus News - RBI’s New Digital Payment Rules: OTP Alone Won’t Work Anymore

New Delhi, Apr 1: From April 1, 2026, the Reserve Bank of India (RBI) has enforced a new framework that reshapes digital payments, banking, and financial services. The rules aim to reduce fraud, strengthen accountability, and modernize India’s payment ecosystem.

The most significant change is the introduction of mandatory two-factor authentication (2FA). OTPs alone will no longer be sufficient. Every transaction via UPI, cards, or wallets must now be verified using two independent factors such as OTP plus PIN, password, biometric authentication, or secure token. This ensures that payments pass through two levels of security.
Risk-based authentication has also been introduced. Low-risk transactions, like routine small payments from trusted devices, will remain seamless. High-risk transactions, such as large payments or those from new devices, will trigger additional verification steps.

Banks and payment platforms face stricter accountability norms.
Fraud compensation is now mandatory if lapses or system failures lead to fraud.
Faster resolution timelines have been set to ensure quicker redressal of complaints.

UPI operations have also been streamlined with efficiency-focused limits.
Balance checks are capped at 50 per app per day.
Users can link a maximum of 25 bank accounts per day on a single UPI app.
Pending transaction status can only be checked three times, with a mandatory 90-second gap.
Auto-debit transactions like EMIs and subscriptions will be processed during non-peak hours, before 10 AM or after 9:30 PM.

Other banking and financial changes include:
UPI-based cardless ATM withdrawals will count toward free monthly limits, with Rs 23 plus taxes charged thereafter.
RuPay Platinum debit card holders lose airport and train lounge access.
International payments will also require 2FA, with full implementation by October 1, 2026.

Beyond banking, Indian Railways has revised ticket cancellation rules.
No refund is allowed within 8 hours of departure.
Between 8–24 hours, passengers receive a 50% refund.
Between 24–72 hours, a 75% refund applies. ·
More than 72 hours before departure, maximum refund is available with a flat deduction.

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Meanwhile, FASTag annual pass fees have been raised from Rs 3,000 to Rs 3,075 for FY 2026–27. PAN card rules have also changed, requiring proof of birth documents like a birth certificate or passport, with Aadhaar-only applications now invalid. The name on PAN must match Aadhaar, and new category-specific forms (Form 93–96) are mandatory.

RBI’s new rules make digital transactions safer but stricter, while tightening accountability across banks, UPI, and financial services. Consumers must adapt to enhanced verification, revised refund policies, and updated compliance norms.