Reserve Bank Deputy Governor H R Khan said there is a greater need for collaboration between banks and the fast growing e-commerce firms, and suggested prepaid instruments as an alternative to avoid the two-factor authentication (TFA) process for small payments.
“E-commerce sites and banks need to integrate,” Khan said here this evening, adding that when the telecom sector was growing, there were similar problems which were solved through collaboration. On the mode of payment, where e-commerce companies have been asking for relaxation of the two-factor authentication process, Khan suggested use of prepaid instruments.
He, however, asserted that TFA system cannot be diluted. “There should not be slip back (in TFA), but we will see which are the areas where we can do small payments. One of the areas is the near-field communication (NFC) technology with tap-n-go model. For e-commerce, we can have some tokenised approach or have prepaid card which facilitates getting away from TFA,” he said, adding that taxi-hire application Uber is already operating in a similar fashion.
In TFA, a user first signs into bank account and then keys-in a one-time password received on the mobile phone to complete the transaction. However, the e-commerce firms feel this is a cumbersome process.
The RBI has made public a discussion paper, suggesting Rs 2,000 as the limit for single-factor authentication but only using the NFC technology in a card payment transaction.
Khan said there can be various ways of collaboration between the banks and e-commerce players and added the RBI will not be averse to both of them forming joint ventures or the e-commerce players working as business correspondents to deepen financial inclusion.