This advancement will ensure that international digital transactions made with Indian-issued cards adhere to the same security standards as domestic transactions.
AFA has established itself as an important element of digital transaction security in India. By introducing an additional layer of verification—such as a One-Time Password (OTP) or biometric authentication—AFA has significantly decreased fraud in domestic online payments.
However, this increased security measure did not extend to international transactions, leaving Indian consumers vulnerable when shopping with foreign merchants. To address this gap, the RBI's proposed initiative seeks to ensure that cross-border transactions have the same level of security that domestic payments provide.
Without AFA, international transactions are vulnerable to cyber threats
The surge in online shopping and digital payments in India has led to a growing trend of consumers purchasing goods and services from international retailers. Unfortunately, this increase in ecommerce has also resulted in a rise in fraud risks, particularly for transactions undertaken outside the country’s regulatory framework. Without AFA in place, these international transactions have remained more susceptible to cyber threats, highlighting the need for added protection for cardholders.
To tackle this concern, the RBI has decided to extend AFA to cross-border CNP transactions, where a physical card is not used, and the transaction occurs online. These situations typically carry a higher risk of fraud due to the absence of the cardholder's physical presence to verify the transaction. Implementing AFA for international transactions will provide better protection for Indian consumers, whether they are purchasing from local or overseas merchants.
Officials from the RBI announced that this initiative will offer an additional layer of security when engaging with international merchants that support AFA. Representatives from the RBI also mentioned that a draft circular will be issued shortly for stakeholder feedback.
