With the rise in banking fraud cases, the Reserve Bank of India has issued new guidelines to secure debit and credit cards. These changes will be effective from 1st October 2020. RBI has issued new rules for debit and credit cards to improve the security and convenience of card transactions.
According to the new guidelines, card users will now be able to register preferences (opt-in or opt-out of services, spend limits, etc.) for international transactions, online transactions as well as contactless card transactions. Hence, debit and credit cards issued by banks will only be enabled for domestic transactions at ATMs and point of sale (PoS) terminals. Banks can deactivate current cards and reissue them based on risk perception. Note that, the RBI’s mandate does not include prepaid cards and gift cards.
Rajesh Mirjankar, MD and CEO, InfrasoftTech, says, “RBI has mandated banks to incorporate risk-mitigation features in customers’ debit cards and credit cards from 1st October. With this new feature, consumers can set up a limit on their credit cards and debit cards. Cardholders will have the option to switch on and off their debit and credit cards for any facility – ATM, NFC, POS, or eCommerce (card-not-present) transaction.”
RBI has asked all banks and other card-issuing companies to disable online payment services of all debit and credit cards that have never been used for online or contactless transactions both in India and internationally. If the cardholder wants to use the credit or debit card outside India, then they need to ask the bank to enable international transactions.
Experts believe the new feature will reduce the frauds from card cloning. Gaurav Chopra, CEO, IndiaLends says, “For new cards being issued, the users will only be able to use these services after registering for them. The main reason for this is to prevent card fraud and misuse and give the consumer better power to manage his or her finances. With spend and withdrawal caps, even if an individual becomes a victim of cyber or ATM fraud, the damage will be limited.”
Cardholders will also have the ability to enable and disable the NFC (contactless) facility which currently has a limit of Rs 2,000 per day without a PIN. Cardholders will also be able to set a limit on various transactions. For instance, an individual who travels to Singapore can activate the global transaction mandate on the card and spend as per his/her needs and can deactivate the same once back in India. This will save both the customers and the bank’s time in setting up a global transaction mandate. Mirjankar, of InfrasoftTech, says “The apps that banks have already rolled out with these features allow customers to set separate limits for each channel such as ATM, PoS, card-not-present, and NFC, in addition, to be able to revise downward their overall card limit.”
Here are some of the key benefits for cardholders;
– Managing International spends: Many international e-commerce websites neither asks for a CVV pin nor sends a one-time-passwords (OTP) to confirm the transaction. This new move will either restrict international usage and/or have a spending cap which makes sure no misuse happens.
– Prevent card fraud: Since the feature will allow card users to set a limit on transactions through various modes – ATM, POS, and card not present transactions, it will reduce the damage caused if the card is stolen and missed or if there is a card skimming fraud.
– Financial discipline: These features will allow users to cap their spending by transaction type. Chopra, of IndiaLends says, “By setting up a limit that can be changed as per the user’s convenience, one can easily build-in discipline with their overall spending.”
– Credit card limit: These features will not have any impact on one’s credit card limit and the spend limits or restrictions can be changed any time through the mobile app or net banking.