By Vishal Maru, Global Processing Head, FSS- Financial Software and Systems
One-Time Passwords (OTPs) have significantly simplified banking and online transactions for Indian customers, offering a fast, dependable way to confirm identity and approve payments. The appeal is obvious: input a brief code received on your phone to verify everything from online transactions to government forms. This simple system has brought digital services to millions, especially people with limited technical skills or device access.
The downside is that this convenience has also created opportunities for scammers, hackers, and cybercriminals. Fraudsters have evolved faster than banks and technology teams can respond. In 2025, India saw a sharp rise in digital fraud, with cybercrime losses hitting ₹22,845 crore, a 206% increase from the previous year. In 2024 alone, over 36.3 lakh cases of financial fraud were reported through the National Cyber Crime Reporting Portal, leading authorities to block more than 9.4 lakh SIM cards to curb SIM swap fraud, where criminals take control of mobile numbers to intercept OTPs. CERT-In data shows phishing caused 38% of fintech frauds in 2025, and AI-driven fake documents and manipulations of KYC and OTP processes have surged 450% since 2022.
Scammers exploit WhatsApp calls with AI-generated voices, deepfake customer service clips, harmful links, malware-laden apps, and Telegram groups to target unsuspecting users. A common scam involves a fraudulent SMS asking for immediate KYC verification, tricking customers into revealing OTPs. Once the OTP is obtained, funds can be transferred in seconds, often leaving the victim unaware until it’s too late. The very simplicity that made OTPs convenient is now being exploited for fraud.
RBI and NPCI Take Action
To address this, the Reserve Bank of India (RBI) and National Payments Corporation of India (NPCI) are encouraging banks and payment providers to explore more secure alternatives to OTPs. In a major 2025 initiative, NPCI plans to introduce biometric authentication for UPI transactions, allowing customers to verify payments using fingerprints or facial recognition technology already available on most smartphones.
How Biometric Authentication Helps Consumers
Unlike OTPs or PINs, biometric verification is fast, secure, and easy. For instance, at a grocery store, instead of waiting for an OTP or remembering a PIN, you can simply scan a QR code and authenticate using your fingerprint or face. Your biometric data stays on your device, encrypted and safe, preventing any external access. This method reduces transaction time to just a few seconds while making payments far more secure.
Global examples show how effective this can be: Apple Pay converts fingerprints and facial data into encrypted representations stored securely on devices, while Mastercard is developing Payment Passkeys that use device-level biometrics to authorise payments. India’s NPCI aims to bring similar technology to UPI users, making everyday payments safer and more convenient.
Consumer Benefits at a Glance
- Speed: Payments happen in seconds, no waiting for OTPs.
- Safety: Transactions are directly linked to your physical presence, making fraud extremely hard.
- Accessibility: Elderly or less tech-savvy users can pay easily without memorising PINs or retrieving OTPs.
- Privacy: Biometric information stays on your device and never leaves it.
Biometric authentication should be part of layered security, not a complete replacement for other safety measures. But by linking payments to a person’s unique physical traits, it offers a far more secure and user-friendly alternative to OTPs.
As India moves toward a cashless future, combining advanced biometrics with our digital payment infrastructure can create a trusted, fast, and inclusive payment ecosystem, protecting users while empowering millions to participate in the digital economy confidently.