Personal Finance

Now, switch off your card to prevent misuse

Parvatha Vardhini C BL Research Bureau | Updated on January 28, 2020

From March 16, cards can be enabled or disabled for different kinds of transactions based on usage pattern and risk-taking ability

Worried about the safety of your card when travelling abroad? Happy paying cash on delivery instead of giving out your card information online? To help you breathe easy and make debit/credit card transactions safer, the Reserve Bank of India has recently brought in some changes.

Cards can now be enabled or disabled for different kinds of transactions based on your usage patterns and risk-taking ability. Mark March 16, 2020, on your calendar. For, this is the day when the changes will be implemented. We give you the lowdown.

Enable at will

From March 16 onwards, you will have the power to switch on/off your card at will for all types of transactions — domestic, international, PoS (point-of-sale), ATM, online (card not present) and contactless (such as Wi-Fi based). So, if you want to carry you credit or debit card with you abroad for emergencies, but at the same time are worried about misplacing or losing your card, you can switch it off selectively for international transactions alone. Even then, you can switch it on in case you need it urgently when abroad. Even in India, you can keep international transactions disabled to reduce the scope for misuse.

Similarly, you need not get caught unawares when a seller uses Wi-Fi for your payments (allowed for up to ₹2,000), which bypasses PIN requirements. You can disable Wi-Fi-based payments at will. Besides, you can set/modify transaction limits (within the limit set by the card issuer/bank). This will help limit damage in case there is a fraudulent transaction on your card.

The facility to make these changes will be available on a 24x7 basis through channels such as mobile apps, internet banking, IVR and ATM. You can also do it the old-fashioned way, visiting the closest bank branch or the office of the card issuer. Whenever there is such a status change, you will be alerted through SMS/email.

Mandatory switch-off

Apart from giving you the flexibility to restrict the scope of usage for your card, the RBI will also take some suo moto calls to ensure customer safety. For instance, existing cards which have never been used for online, international and contactless transactions will mandatorily be disabled for these purposes.

So, don’t be surprised if your transaction on any of these channels don’t go through after mid-March, in case you decide to debut it for some shopping online. You may then have to get in touch with the bank /issuer to enable the option. Those who use cards to only withdraw money from an ATM or swipe at PoS terminals will benefit from this mandatory move.

This apart, banks or issuers will have the right to disable card not present (domestic and international) transactions, card present (international) and contactless transactions for existing cards based on their perception of risk. It is not clear yet what parameters the banks will use to conclude that you could be at risk. If you find that your card has been automatically disabled and need to use it for any of the above-mentioned purposes, you may have to approach the bank to re-enable it.

Is your card nearing expiry? The new card will henceforth be enabled only for ATM or PoS transactions within India. You will have to enable the other options at your end, depending on your comfort and usage patterns.

Earlier moves

Safety of card transactions has always been a point of worry. In the past, measures such as the introduction of two-factor authentication, facility for use of virtual cards and mandating EMV chip cards have all been directed towards making card payments safer. However, according to the latest annual report of the banking ombudsman, card-related complaints are on the rise. In 2018-19, ATM/debit and credit-card related complaints constituted a good one-fourth of the total number of complaints received. This is a steady increase from 18 per cent in 2016-17.

Considering the rising grievances, the RBI came out with a few additional measures in the last two years to protect cardholders. In 2018, the RBI clearly laid down the limits to liability of the customer in electronic (card not present) transactions. Accordingly, if you get entangled in a fraudulent electronic transaction, you have zero or no liability in case the negligence or deficiency is on the part of the bank. You thus have a right to get back the money you lost entirely.

On the other hand, if the fraud occurred due to your negligence, you can limit your losses by reporting to the bank immediately after you find yourself duped. Whatever losses you incur after reporting will have to be borne by the bank. When there is no deficiency on either your part or on the part of the bank, but the fraud has happened because of a breach elsewhere in the system, the entire loss will be made good if you report it within three working days. If you report it within four to seven working days, your liability will be limited to only ₹5,000-25,000, depending on the nature of the transaction.

Secondly, tokenisation of cards was introduced in January 2019. Through this, customers can replace actual card details with an alternate code called the token for transactions through mobile phones and tablets. Tokenised card transaction is considered safer as actual card details are not shared with the merchant during transaction processing.

Grievance redress

While measures to ensure safety are aplenty, approaching your bank to block your card immediately on finding that you have been duped helps.

Also, if your grievance is not made good at the bank level, or if you are not satisfied with the resolution, you can move the banking ombudsman. The address and area of operation of the ombudsman offices across the country are listed on the RBI website along with links to mail and track your complaints.

Published on January 28, 2020

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