Current Affairs: Passage of the Day - 10 February 2025 | Current Affairs & General Knowledge - CLAT PDF Download

Directions: Read the passage carefully and answer the questions that follow.
The Reserve Bank of India (RBI) on Friday, announced its plans to introduce Additional Factor of Authentication (AFA) for cross-border "Card Not Present" (CNP) transactions to enhance the security of online payments.
This will bring international digital transactions made using Indian-issued cards under the same security standards that have been applied to domestic transactions, according to a Business Standard report.
As of now, an extra layer of verification like through a One-Time Password (OTP) or biometric authentication exists for domestic transactions which reduces fraud when making online payments.
However, this didn't apply to international transactions till now. Thus, the RBI's newly proposed move plugs this gap.
Customers can also make international purchases more confidently online since their transactions are safeguarded.
This comes when online shopping and digital payments have seen a massive surge in India, with shoppers also increasingly buying from international retailers.
This increases the risk of fraud as well. As a result, the RBI has decided to extend AFA to cross-border Card Not Present (CNP) transactions, where a physical card is not used, and the transaction takes place over the internet, according to the report.
When Indian cardholders make purchases using their cards from international sellers online, they have to verify the transaction using an OTP sent to their registered mobile number or through biometric authentication, which ensures that the person making the purchase is indeed the cardholder.
[Excerpt from HT "RBI Introduces Additional  Factor Authentication for International Transactions" Dated 10/02/25]

Q1: What is the primary focus of RBI’s new security measure?
(a) Strengthening security for cash withdrawals
(b) Enhancing security for cross-border “Card Not Present” (CNP) transactions
(c) Reducing ATM transaction fees
(d) Restricting the use of international credit cards

View Answer  

Ans: (b) Enhancing security for cross-border “Card Not Present” (CNP) transactions
Sol: The RBI is introducing Additional Factor of Authentication (AFA) for international online transactions to improve security and reduce fraud.

Q2: What is Additional Factor of Authentication (AFA)?
(a) A method to increase the speed of online payments
(b) A system that ensures cardholders pay extra fees on transactions
(c) A security process requiring more than one method of verification
(d) A process used only for in-store transactions

View Answer  

Ans: (c) A security process requiring more than one method of verification
Sol: AFA adds an extra layer of security to online payments, using OTP, biometric verification, or other methods.

Q3: Before this announcement, where was AFA mandatory?
(a) International transactions only
(b) Domestic transactions only
(c) Both domestic and international transactions
(d) ATM withdrawals only

View Answer  

Ans: (b) Domestic transactions only
Sol: AFA was previously mandatory only for domestic transactions in India, while international CNP transactions remained vulnerable.

Q4: Why is RBI extending AFA to international transactions?
(a) To increase transaction fees for overseas payments
(b) To encourage domestic consumers to shop only within India
(c) To reduce fraud risks associated with cross-border payments
(d) To promote cash-based transactions

View Answer  

Ans: (c) To reduce fraud risks associated with cross-border payments
Sol: The absence of AFA in international transactions made them more vulnerable to cyber fraud, leading to RBI’s decision to enhance security.

Q5: Which of the following is NOT a commonly used authentication factor in AFA?
(a) Passwords or PINs
(b) Physical devices like ATM cards
(c) Biometric identifiers
(d) Internet browsing history

View Answer  

Ans: (d) Internet browsing history
Sol: AFA relies on three authentication types—something the user knows (passwords), something the user has (ATM cards), and something the user is (biometrics).