India's digital payments ecosystem may be on the verge of another major shift, with global payments company Visa unveiling a passkey-based authentication solution aimed at reducing dependence on traditional passwords and OTPs.

The new system, called Visa Payment Passkey (VPP), enables cardholders to authenticate online transactions using security features already built into their smartphones and devices. These include fingerprint scans, facial recognition, device PINs and screen patterns.

The launch comes at a time when online fraudsters are increasingly exploiting OTP-based scams, while consumers continue to face issues such as delayed message delivery and interrupted payment experiences.

Speaking at the launch event on Thursday, Visa's India and South Asia Group Country Manager Suresh Sethi said payment authentication needs to evolve to keep pace with a rapidly changing digital economy and the rise of AI-powered commerce.

According to him, security systems designed around passwords and one-time codes are no longer sufficient for a future where intelligent assistants, connected devices and automated digital transactions are expected to become commonplace.

What changes for consumers?

If adopted by banks and merchants, Visa's passkey technology could alter how online card payments are completed.

Instead of waiting for an OTP sent via SMS, users would simply verify their identity using a fingerprint, face scan or device credentials already registered on their smartphone.

The system is built on FIDO (Fast Identity Online) standards, a globally recognised framework designed to replace passwords with more secure authentication methods.

  • For consumers, the most visible changes could include:
  • Faster checkout experiences
  • Reduced dependence on mobile network availability for OTP delivery
  • Lower exposure to phishing attacks that trick users into sharing OTPs
  • A smoother payment journey across apps and websites
  • Enhanced security through device-based authentication

The solution also complies with India's two-factor authentication requirements by combining device possession with biometric or device credential verification.

Visa believes the future of commerce will increasingly be shaped by artificial intelligence and connected technologies.

As AI-powered shopping assistants become more common, authentication systems will need to be both secure and seamless. The company argues that traditional password-based systems create friction and are more vulnerable to fraud, whereas passkeys can provide stronger protection while requiring less effort from users.

Sethi said the next stage of India's digital payments growth will depend not just on transaction volumes but on building greater trust and security into the ecosystem.

India's growing digital payments footprint

India has already emerged as a global leader in digital payment innovation. Visa noted that the country is currently the world's largest market for tokenised online card transactions.

According to the company, India has generated more than 900 million payment tokens, including nearly 500 million Visa tokens. Industry observers attribute this growth largely to the Reserve Bank of India's tokenisation framework, which has encouraged stronger protection of card data during online transactions.

The RBI's evolving regulations have also opened the door for alternative authentication mechanisms beyond OTPs, paving the way for technologies such as passkeys.

With PTI inputs