With the increase in cases of banking fraud, new debit and credit card protection guidelines have been released by the Reserve Bank of India. These amendments will be effective today, as of October 1 , 2020. To enhance the protection and convenience of card transactions, RBI has released new debit and credit card rules. Under the new rules, card users will now be able to register preferences for international purchases, internet transactions, as well as contactless card transactions (opt-in or opt-out of services, spending limits, etc.). Therefore, debit and credit cards issued by banks will only be allowed at ATMs and Point of Sale ( PoS) terminals for domestic transactions. Based on risk perception, banks may deactivate current cards and reissue them. Notice that prepaid cards and gift cards are not included in the RBI mandate.
Rajesh Mirjankar, MD and CEO, InfrasoftTech, says, "As of October 1st, RBI has required banks to provide risk mitigation features in debit cards and credit cards of customers. Consumers can set up a cap on their credit cards and debit cards with this new feature. For any facility, ATM, NFC, POS, or eCommerce (card-not-present) transaction, cardholders will have the option to turn on and off their debit and credit cards.” RBI has asked all banks and other card-issuing companies to disable all debit and credit card online payment services that have never been used for online or contactless transactions, both in India and internationally. If a cardholder wishes to use a credit or debit card outside of India, they must ask the bank to allow foreign transactions to take place.
The NFC (contactless) facility, which currently has a limit of Rs 2,000 per day without a PIN, will also be able to allow and disable cardholders. Also, cardholders would be able to set a cap on different purchases. A person who travels to Singapore, for example, can trigger the global transaction mandate on the card and spend according to his / her needs and can deactivate it once back in India. This would save time for both consumers and the bank to set up a worldwide transaction mandate. InfrasoftTech's Mirjankar says, "The apps that banks have already introduced with these features allow customers to set separate limits for each channel, such as ATM, PoS, card-not-present, and NFC, in addition to being able to revise their overall card limit downwards."
Here are some of the significant advantages for cardholders:
-International spending management: Many foreign e-commerce websites do not request a CVV pin or give a one-time password (OTP) to validate the transaction. This new move would either limit foreign usage and/or include an expense restriction that guarantees that no abuse occurs.
-Prevent card fraud: Because the role enables card users to set a cap on purchases by different modes-ATM, POS, and card not present purchases, if the card is stolen and skipped or if there is a card skimming fraud, it will decrease the damage caused.
-Financial discipline: These characteristics allow users to cap their spending by type of transaction. Chopra, of IndiaLends, says, "By setting a cap that can be adjusted according to the convenience of the consumer, with their total spending, one can easily build-in discipline."
-Credit card limit: These features would have no effect on one's credit card limit, and via the mobile app or net banking, the spending limits or limitations can be adjusted at any time.