TRAI’s OTP Delay Debate: A Double-Edged for Indian Digital Ecosystem and Consumers?

In a digital-first economy like India, One-Time Passwords (OTPs) are critical in securing transactions and online activities. With over 1.6 billion OTPs generated daily, they underpin everything from banking transactions to e-commerce checkouts. However, the growing menace of OTP-related cybercrimes and spam messages has prompted the Telecom Regulatory Authority of India (TRAI) to propose new anti-spam guidelines by mandating every operator and messaging service to trace the origin of each message, which has seeded the fear of delay in OTP delivery.

The new traceability guidelines were earlier supposed to come into effect on December 01, 2024. However, after some close consideration, TRAI has decided to delay the rollout by another 10 days, which means that consumers may start receiving OTPs with a delay of 5-10 seconds only from December 11, 2024. While TRAI has assured about instant delivery and has refuted the concerns related to delays in OTP messages, experts fear a delay until the new system stabilises.

The proposed traceability system may cause a delay—possibly 5-10 seconds—in delivering OTPs, especially during peak hours. This interval would allow telecom operators to cross-check the origin and legitimacy of the request, reducing the chances of spam messages reaching users. Industries relying heavily on OTPs, such as banking, e-commerce, and social media platforms, must adapt their processes accordingly.

While the intention is clear—to enhance security and reduce fraud—this move raises questions about its broader impact on consumers and businesses alike.

But before we dig deep into the impact, inconvenience, and pros and cons of the delay in OTP, let’s first understand the causes that have forced TRAI to revisit the instant OTP mechanism.

Anti-Spam Measures: Need of the Hour

India has one of the highest rates of digital banking, with 55% of transactions needing OTP verification. The e-commerce revolution and exploded adoption of mobile banking have led to unprecedented dependency on OTP. While 95% of online transactions and logins are verified by OTPs in India, 80% of e-commerce transactions are validated via OTPs. The exponential rise in digital transactions has led to a surge in sophisticated cybercrime.