Due to rising volume & value of transactions through debit and credit cards, the RBI has introduced new features to improve user convenience and increase the security of card transactions.
These new features will come into effect from March 16, 2020 under Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
All new cards (whether physical or virtual) at the time of issue/reissue will be enabled only for usage at ATMs and Points of Sale (PoS) within India. The cards will no longer come with a default facility for international transactions or online transactions.
Cardholder will have the facility to enable or disable domestic or international transaction as per their discretion. If the cardholder wishes to enable online transactions, they will have to apply to the issuer to avail these services.
Online and international thefts/frauds are difficult to trace. A tighter control over such transaction can go long way to protect cardholders against fraudulent transactions.
Further, no card will be enabled for contactless transaction by default. Contactless cards allow users to pay just by tapping their card at payment machines without PIN or signature, making it an easy target for theft.
For existing cards, issuers may take a decision, based on their risk perception, whether to disable the following:
1. Card not present (domestic and international) transactions
2. Card present (international) transactions,
3. Contactless transaction rights
Existing cards which have never been used for online (card not present) / international / contactless transactions shall be mandatorily disabled for this purpose.
For every type of transaction viz. domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc., cardholders will have the facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer).
The cardholder will be provided alerts / information / status, etc., through SMS / e-mail, as and when there is any change in the status of the card.
Prepaid gift cards and those used at mass transit systems are not covered under this provision.
Previously, RBI had asked banks to replace the magnetic stripe debit card of their customers with a new Europay, Mastercard, and Visa (EMV) card in the wake of increase in the online/ATM fraud through magnetic stripe cards. EMV cards provide enhanced level of security against misuse in the form of skimming, cloning, etc. making it difficult for fraudsters to copy your data. Magnetic stripe debit card of both public and private banks are to be blocked from January 1, 2020.
Precautionary measures to be taken by cardholders
If you come across any unauthorized transaction in your bank account, bring this to your bank's notice immediately. RBI has issued instructions which states that if a customer informs the bank regarding such transaction within three working days of receiving information, his/her liability will be nil. Bank shall credit the amount involved in such transaction to the customer's account within 10 working days from the date of information by the customer.
Furthermore, for better safety of capital, diversify your deposits across different banks instead of parking all your savings in one bank. You may also diversify your investment across other asset classes such as mutual funds and provident funds.
These new features will come into effect from March 16, 2020 under Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
All new cards (whether physical or virtual) at the time of issue/reissue will be enabled only for usage at ATMs and Points of Sale (PoS) within India. The cards will no longer come with a default facility for international transactions or online transactions.
Cardholder will have the facility to enable or disable domestic or international transaction as per their discretion. If the cardholder wishes to enable online transactions, they will have to apply to the issuer to avail these services.
Online and international thefts/frauds are difficult to trace. A tighter control over such transaction can go long way to protect cardholders against fraudulent transactions.
Further, no card will be enabled for contactless transaction by default. Contactless cards allow users to pay just by tapping their card at payment machines without PIN or signature, making it an easy target for theft.
For existing cards, issuers may take a decision, based on their risk perception, whether to disable the following:
1. Card not present (domestic and international) transactions
2. Card present (international) transactions,
3. Contactless transaction rights
Existing cards which have never been used for online (card not present) / international / contactless transactions shall be mandatorily disabled for this purpose.
For every type of transaction viz. domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc., cardholders will have the facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer).
The cardholder will be provided alerts / information / status, etc., through SMS / e-mail, as and when there is any change in the status of the card.
Prepaid gift cards and those used at mass transit systems are not covered under this provision.
Previously, RBI had asked banks to replace the magnetic stripe debit card of their customers with a new Europay, Mastercard, and Visa (EMV) card in the wake of increase in the online/ATM fraud through magnetic stripe cards. EMV cards provide enhanced level of security against misuse in the form of skimming, cloning, etc. making it difficult for fraudsters to copy your data. Magnetic stripe debit card of both public and private banks are to be blocked from January 1, 2020.
Precautionary measures to be taken by cardholders
If you come across any unauthorized transaction in your bank account, bring this to your bank's notice immediately. RBI has issued instructions which states that if a customer informs the bank regarding such transaction within three working days of receiving information, his/her liability will be nil. Bank shall credit the amount involved in such transaction to the customer's account within 10 working days from the date of information by the customer.
Furthermore, for better safety of capital, diversify your deposits across different banks instead of parking all your savings in one bank. You may also diversify your investment across other asset classes such as mutual funds and provident funds.
Warm Regards,
Varun Vaid
Varun Vaid
+91-9814612907
+91-0172-4623907
Twitter: @vaid_varun; @MMFA_IN
+91-0172-4623907
Twitter: @vaid_varun; @MMFA_IN
