Razorpay and YES BANK have introduced India’s first RBI-approved biometric authentication system for online card payments, marking a significant advance in digital payment security. The system replaces traditional two-factor authentication methods like PINs and SMS OTPs with biometric verification, mainly using facial recognition technology. The launch follows the broader push toward biometric authentication in India’s payment ecosystem, where the National Payments Corporation of India (NPCI) is also developing similar capabilities for UPI transactions.
The system operates through Razorpay’s Access Control Server (ACS), which combines biometric authentication with AI-powered risk checks. The ACS infrastructure can process up to 10,000 transactions per second while maintaining 99.99 percent uptime, making it suitable for high-volume payment processing. The development builds on RBI’s earlier initiatives to test biometric authentication in digital payments through its Regulatory Sandbox program.
The new authentication method addresses a major challenge in digital payments, where OTP-related issues currently account for approximately 35 percent of transaction failures. Initial results show a 95.3 percent authentication success rate, along with a 35 percent reduction in OTP errors and a 75 percent decrease in payment process abandonment. The improvements match similar efforts by other payment providers, such as Visa’s development of FIDO-based payment passkeys to replace OTP authentication in India.
The implementation meets the Reserve Bank of India’s September 2025 guidelines, which call for enhanced authentication methods to improve security and reduce payment failures. The timing is particularly relevant given that fraud losses in India exceeded ₹520 crore in FY25. The initiative represents part of a larger trend in India’s financial sector, where institutions are increasingly adopting biometric solutions to combat fraud and enhance security.
“The Razorpay Banking Stack is more than a suite of products, it’s a blueprint for the next decade of India’s financial infrastructure. It’s where banks bring trust, and Razorpay brings speed. Where innovation meets regulation,” said Razorpay’s CEO.
The broader Razorpay banking stack includes additional features such as unified payment platforms for online and offline channels, real-time terminal visibility, and enhanced POS systems, designed to streamline payment operations and improve user experience. The developments come as India’s digital payment landscape continues to evolve, with facial recognition becoming increasingly central to payment authentication strategies across the country.
Sources: Angel One, Razorpay Blog, Fintech News Singapore, The Paypers
