RBI gives card issuers 2 months time to improve user convenience and increase security

To improve user convenience and increase the security of card transactions, the Reserve Bank of India (RBI) has given two months time to card issuers to decide, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights.

Existing cards which have never been used for online (card not present) / international / contactless transactions will be mandatorily disabled for this purpose, the RBI said in a circular on "Enhancing Security of Card Transactions" issued to the chiefs of all Banks, authorised payment networks and non-bank pre-paid instrument issuers.

A "card present" transaction is a card transaction that is carried out through physical presence of card at the point of transaction. An example is a transaction carried out at an ATM or a PoS (point of sale) terminal.

A "card not present" transaction does not require the card to be physically presented at the point of transaction. An example is an online transaction or a mobile banking transaction using the card.

Based on their issuance, usage and payment by the card holder, there are three types of cards -- debit cards, credit cards and prepaid cards.

As per the circular, at the time of issue/re-issue, all cards (physical and virtual) should be enabled for use only at contact based points of usage [ATMs and PoS devices] within India. Issuers should provide cardholders a facility for enabling card not present (domestic and international) transactions, card present (international) transactions and contactless transactions, subject to conditions.

The conditions specified by RBI include the facility to switch on/off and set/modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS/ATMs/online transactions/contactless transactions, etc.; and alerts /information / status, etc., through SMS/e-mail, as and when there is any change in status of the card.

The above-mentioned facility should be available on a 24x7 basis through multiple channels - mobile application/internet banking/ATMs/Interactive Voice Response (IVR); this may also be offered at branches / offices. The directions issued under the circular will come into effect from March 16, 2020.

The RBI said the provisions of the circular on "Enhancing Security of Card Transactions" are not mandatory for prepaid gift cards and those used at mass transit systems.