Using your credit and debit cards is about to get a bit safer.
On January 15, 2020, the Reserve Bank of India (RBI) issued a notification asking all the banks to enhance the security features of debit and credit card transactions.
New security features added
Effective March 16, 2020, banks need to have features that limit the usage of debit and credit cards in India and when customers travel abroad.
Consumers can now modify transaction limits within the overall card limit for all types of domestic and international transactions, be they at point of sale (PoS) terminals, ATMs, online, or contactless.
This feature will be available for transactions carried out with the physical, virtual and contactless cards.
Consumers can also switch on and off (enable and disable) different transaction facilities on their cards in keeping with their usage. If you hold a credit card and use it only for online shopping on e-commerce websites such as Amazon and Flipkart, it will make sense to switch off other transaction modes such as PoS, ATMs and contactless transactions on that card.
Similarly, on an international credit card, you can switch off all the other transaction modes and international usage can be switched on while travelling abroad.
“The RBI’s directives are good steps towards curbing card frauds and unauthorised transactions. At the same time, it gives more control to the users in deciding several aspects of card usage,” says Pankaj Bansal, Vice President and Head – Key Account Management, Bankbazaar.com.
Using the features
Banks need to provide these facilities to consumers on a 24 x 7 basis through multiple channels –mobile application, internet banking, automated teller machine (the bank’s own ATM) and interactive voice response (IVR). A consumer can also avail of this facility by visiting the bank’s branch.
From March 16, banks will issue new cards or re-issue existing ones on expiry. These would enable only transactions via physical swipes in point-of-sale terminals and ATMs. Everything else, from online transactions on e-commerce websites to contactless transactions, would have to be manually enabled by the consumer. The likes of HDFC Bank, ICICI Bank, Axis Bank, etc. already have some of these safety and control features for their consumers.
The RBI has instructed banks to disable features in existing debit and credit cards that have never been used for online or contactless transactions. So, if you have been using your cards only at ATMs and point of sale terminals, only those features will be enabled. You may able to reinstate the disabled facilities on your card by approaching the bank’s branch or helpline. Murali Nair, President of Zeta’s Banking Business says, “This decision from central bank is a welcome step and would protect rural and new to banking consumers, senior citizens, etc. from fraudulent transactions wherein they may not be using all transaction facilities available.”
Benefits to consumers
Often, consumers have concerns relating to the misuse of cards. However, they can now protect the misuse on cards by switching off the use for online transactions, international usage, etc. Also, consumers were worried of overspending with multiple debit and credit cards. They can restrict the usage by setting the limit for usage on all cards. Sunil Khosla, Head Digital Business of India Transact Services Ltd says, “By setting the transaction limit, the consumer can now limit the use to certain expenses and monitor the usage of the card periodically. Also, other features make the cards more secure for consumers.”
In the short term, there would be some cost impact on banks because they have to issue the new cards, and disable international transactions and e-commerce usage. Nair says, “Until customers enable this feature on the card the usage will be limited. So, revenue may be impacted for the bank.” Also, there will be additional cost of setting up IVR facilities for scheduled commercial banks, rural banks, co-operative banks, etc. in case they do not have such set-up at present.