Over the years, the Reserve Bank of India has prioritised security of digital payments, in particular the requirement of Additional Factor of Authentication (AFA) for making payments. No specific factor was mandated for authentication, but the digital payments ecosystem has primarily adopted SMS-based OTP as AFA. While OTP is working satisfactorily, technological advancements have made available alternative authentication mechanisms.

As part of enhancing the robustness of Aadhaar Enabled Payment System (AePS), it was announced in the Statement on Developmental and Regulatory Policies dated February 08, 2024, that the onboarding process of AePS Touchpoint Operators will be streamlined. In recent times, there have been instances of frauds perpetuated through AePS due to identity theft or compromise of customer credentials.