NPCI Third Party Application Provider Security Standards and Certification Framework 2024

The NPCI Third Party Application Provider (TPAP) Security Standards and Certification Framework 2024 establishes mandatory security controls, architecture requirements, and periodic certification processes for fintechs and technology providers building applications on NPCI infrastructure. The framework mandates security audits, vulnerability assessments, and compliance with ISO 27001, PCI-DSS standards where applicable, along with NPCI-specific technical integration guidelines. It introduces tiered certification levels based on transaction volumes and criticality, requiring annual recertification and continuous monitoring of security postures. The framework addresses emerging risks in digital payments including API security, data localization, incident response protocols, and third-party vendor risk management for the expanding ecosystem of UPI apps, payment aggregators, and embedded finance providers.

• Standardizes security baseline across diverse third-party providers including PhonePe, Google Pay, Paytm, CRED, and neobanks, reducing systemic vulnerabilities in India's payment infrastructure
• Provides clear certification pathway enabling faster market entry for compliant fintechs while filtering out inadequately secured applications from accessing NPCI rails
• Mandates separation of payment credentials from device storage and implements tokenization requirements, significantly reducing data breach impact as seen in multiple payment app incidents
• Establishes liability framework and insurance requirements for TPAPs, protecting consumers and creating accountability for security failures in the payment chain
• Enables NPCI to conduct surprise audits and impose sanctions including certification suspension, maintaining ecosystem discipline as demonstrated during 2023-24 compliance reviews

• Many smaller fintech startups and payment aggregators struggle with resource-intensive annual certification costs, particularly ISO 27001 and specialized payment security audits ranging from ₹15-40 lakhs
• Ambiguity persists around liability distribution when breaches occur through integrated third-party SDK providers or cloud infrastructure partners not directly certified by NPCI
• Implementation timelines often clash with rapid product iteration cycles in fintech, with several TPAPs reported to have launched features before completing requisite security certifications in 2023
• Framework lacks granular guidance on emerging risks including deepfake-based authentication attacks, AI-powered fraud detection requirements, and quantum-safe cryptography migration paths
• Continuous monitoring mandates create alert fatigue, with compliance teams at mid-sized TPAPs reporting difficulty distinguishing critical security events from routine anomalies

• In 2023, NPCI temporarily suspended onboarding of new users for a prominent UPI application after security audit revealed inadequate encryption of transaction logs and non-compliant data retention practices, impacting over 8 million pending customer registrations until remediation was completed.
• MobiKwik faced NPCI scrutiny in 2024 following reports of a data breach exposing payment instrument details, prompting emergency recertification audits across multiple TPAPs and resulting in enhanced vendor risk management clauses in the certification framework.
• Paytm Payments Bank's regulatory challenges with RBI in early 2024 cascaded to its TPAP certifications, requiring the company to demonstrate complete segregation of payment processing infrastructure from banking operations and undergo expedited security recertification for its third-party application services.

• Establish automated compliance monitoring dashboards integrating directly with TPAP systems to provide real-time security posture visibility to NPCI, reducing reliance on periodic manual audits
• Develop tiered, risk-based certification tracks allowing lean startups with limited transaction volumes to meet proportionate security standards while scaling requirements as they grow
• Create shared threat intelligence platform where certified TPAPs can anonymously report attack patterns, fraud vectors, and vulnerabilities, fostering collaborative defense across the ecosystem
• Implement certification reciprocity agreements with international payment security standards (PCI, PA-DSS) to reduce duplicate compliance burden for TPAPs operating across multiple jurisdictions and payment networks