Say Goodbye to OTPs: SBP Introduces TPIN/FPIN for Pakistan Digital Banking

In a significant development, the State Bank of Pakistan (SBP) rolled out a series of directives to improve the security of ‘Pakistan’s digital banking’. A circular was addressed to all Banks and Microfinance Banks (MFBs), directing the replacement of SMS-based One-Time Passwords (OTPs) with a more secure Transaction PIN (TPIN) or Financial PIN (FPIN) for financial transactions via banking apps or internet portals. Pakistan’s Mobile Banking will reportedly adopt TPINs/FPINS by 2025.

Digital Banking Gets Smarter: SBP Mandates TPIN for Safer Transactions

SMS-based OTPs will not be used for mobile or internet banking transactions starting from January 1, 2025. Customers will have to verify transactions using TPINs or FPINs. This move aims to reduce the risk of interception and fraud associated with SMS-based OTPs. In addition to that, banks will also replace SMS transactional alerts with free push notifications, in-app alerts, and email notifications.

To boost customer trust, SBP directed that banks will be held liable for compensating customers in case of fraud or unauthorized transactions conducted via their mobile banking platforms. Banks need to maintain detailed logs of all transaction notifications to help in dispute resolution. Furthermore, SBP introduced standardized templates for transaction notifications, providing clear and consistent communication across all banks and MFBs.

TFPIN/TPIN-based authentication will also address vulnerabilities in SMS-based OTPs. OTPs are susceptible to interception via SIM swaps or phishing attacks. By embracing these new measures, SBP will bolster the security framework of digital payments. Moreover, it will align Pakistan with global standards in secure online banking practices. These modifications will provide better security and accountability in digital banking. Adapting to the new system will require some initial adjustments, however, there will be long-term benefits including reduced fraud and secure financial transactions.

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