Why Passkeys Are Replacing OTPs for Secure Digital Payments

India’s digital payment ecosystem faces mounting vulnerabilities tied directly to the widespread reliance on One-Time Passwords. As digital transactions surge across the country, SMS-based verification methods have become increasingly susceptible to interception, phishing, and social engineering.

The Core Vulnerabilities of SMS Authentication

Legacy systems built around simple codes struggle against sophisticated modern fraud techniques. The primary risk vectors plaguing current authentication frameworks include security gaps where verification codes can be shared or stolen during routine transactions.

These persistent threats have highlighted the need for more robust authentication methods to protect consumers from sophisticated cyber threats. The digital landscape requires transitioning toward standards that eliminate the risk of credential theft.

How Passkeys Protect Digital Transactions

Payment passkeys replace traditional passwords and static codes by utilizing public-key cryptography based on FIDO protocols. The private key remains stored securely and locally on the user device, meaning sensitive data is never transmitted over standard networks.

Consumers authenticate transactions using device-specific biometrics such as fingerprints, facial recognition, or device-specific PINs. This approach satisfies requirements for secure verification while eliminating the risk of credential theft during checkout.

While widespread adoption requires sustained industry-wide integration and consumer education, the transition away from static text messages represents a significant shift in payment security for Indian consumers.