🇮🇳India

RBI Strong Customer Authentication (SCA) Non-Compliance & OTP Failures

1 verified sources

Definition

RBI compliance requires OTP-based 2FA for online card payments[7]. Retailers face penalties for non-compliance (up to ₹5 lakh for willful violations under Payment Systems Act 2007). Failed authentication attempts cause order abandonment, customer churn, and manual resolution overhead.

Key Findings

  • Financial Impact: ₹50,000–₹5,00,000 per violation; typical e-commerce sites lose 3–8% transaction volume (₹10–₹50 lakhs annually for ₹10 crore GMV); manual support escalation = ₹500–₹2,000 per failed transaction
  • Frequency: Daily (per transaction batch); penalties issued during RBI audits (annual/bi-annual)
  • Root Cause: RBI-mandated SCA increases authentication friction; OTP delivery latency; merchant gateway misconfiguration; customer abandonment during verification step

Why This Matters

The Pitch: Indian e-commerce retailers lose 3-8% of transaction volume annually due to authentication friction and failed OTP deliveries. Optimizing SCA integration and real-time verification reduces declined transactions and support costs.

Affected Stakeholders

Payment Operations Manager, Compliance Officer, Customer Support Team, E-commerce Platform Managers

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Manual Authorization Verification & Chargeback Resolution Bottleneck

₹40,000–₹80,000/month (20–40 hours @ ₹2,000–₹2,500/hour staff cost); 2–3 day settlement delay = ₹5–₹20 lakhs tied up in AR for ₹10 crore GMV; chargeback fees = ₹500–₹5,000 per incident

Settlement Delay & Acquirer Hold-Back Period

₹15–₹50 lakhs locked in AR per ₹10 crore GMV; opportunity cost = 8–12% annualized (₹12–₹60 lakhs/year); settlement fees = 0.5–1.5% of transaction value (₹50–₹150 lakhs/year for ₹10 crore GMV)

अतिरिक्त स्टॉक होल्डिंग लागत

₹10-20% excess inventory carrying cost (15-20% annual rate)[2][8]

धोखाधड़ी जाँच पर अतिरिक्त कर्मचारी लागत

₹2-3 lakhs/month in analyst overtime and training

स्टॉकआउट और ओवरसेलिंग हानि

₹2-5% revenue loss from stockouts and overselling[2][3]

इन्वेंटरी संकोचन

₹1-3% of inventory value annually to shrinkage[1][2]

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