Visa Says Authentication Must Move Beyond OTPs, Launches Payment Passkey in India

Digital payment authentication must move beyond passwords and one-time passwords (OTPs) as artificial intelligence-driven commerce gathers pace, a top Visa official said on Thursday.

"Authentication cannot remain dependent on passwords or one-time codes designed for an earlier digital era. It must become secured by design, invisible to the consumer, and resilient against increasingly sophisticated fraud," Suresh Sethi, group country manager for India and South Asia of Visa, said at a company event.

The global payments major launched its 'Payment Passkey' solution in India on Thursday.

The company said VPP enables consumers to authenticate online card payments using capabilities already built into their mobile devices, including fingerprint, facial recognition, device PIN or pattern, instead of relying solely on OTPs.

This helps satisfy the two-factor authentication requirement applicable in India.

Sethi said the solution is built on globally accepted FIDO standards and is designed to make digital payment authentication trusted, secure and more seamless for consumers.

"It enables consumers to authenticate transactions by doing something very intuitive, using their secure capabilities already built into the device they use every day, the mobile phone, whether through the fingerprint, facial recognition, device pin or pattern. This strengthens protection against risks emanating from OTP phishing while improving the overall user experience," he said.

He said India's digital payments ecosystem is entering a new phase where trust will become as important as scale.

"As we speak, we are entering the third phase. This is a phase centred on trust," Sethi said, adding that as digital payments become mainstream, the priority is to strengthen the trust layer so that transactions remain secure, resilient and accessible.

Highlighting India's progress in digital payments, Sethi said the country has become the world's most tokenised market for online card payments.

"Today, India is the world's most tokenised market for online card payments with more than 900 million payment tokens and almost 500 million Visa tokens as part of that," he said, attributing the progress to the Reserve Bank of India's regulatory framework on tokenisation and digital payment security.

According to the company, the RBI's framework has enabled alternative mechanisms for an additional factor of authentication beyond OTPs, creating an opportunity to offer a faster and more secure payment experience.

Sethi said AI is rapidly transforming commerce, with intelligent assistants, connected devices and embedded commerce expected to play a larger role in future transactions.

"Artificial intelligence, as we all know, is today rapidly transforming how consumers discover, compare, and purchase products. Intelligent assistants will increasingly participate in commerce, and connected devices will become active participants in transactions," he said.

Sethi said India has an opportunity to become "the world's most trusted digital economy", adding that achieving this would require continued collaboration among regulators, banks, fintech firms, merchants and technology providers.