Leading banks in India have started implementing the RBI’s recent guidelines to enhance security of credit and debit card transactions. Banks, including State Bank of India, have started to disable existing cards which have never been used for online, international or contactless transactions. Customers wanting to use these cards can get these restrictions removed after giving an instruction to their respective banks.
In a recent circular to the banks, the Reserve Bank of India (RBI) specified several precautionary steps to banks to prevent misuse of all types of card-based transactions. As per the notification, card issuing banks are also required to provide cardholders “facility to switch on/off and set/modify transaction limits for all types of transactions – domestic and international – at Point of Sale (PoS) / ATMs / online transactions / contactless transactions, etc.” Banks are required to offer this facility on a 24×7 basis through multiple channels including branches, mobile application, internet banking, ATMs and Interactive Voice Response.
As per the RBI instructions, theses guidelines came into effect from March 16, 2020, i.e. Monday. Banking industry sources said post this RBI circular, many banks have put into effect suggestions of the regulator.
Banks have provided customers an SMS-based or call centre-based facility for enabling the cards on which online and international transactions have been blocked due to non-usage of the cards.
Further steps are being taken by the lenders to build in more security in usage of cards. “At the time of issue/re-issue, all cards (physical and virtual) shall be enabled for use only at contact based points of usage (viz. ATMs and Point of Sale (PoS) devices) within India,” as per the RBI January 15, 2020 circular to banks, which came into effect from Monday.
For existing cards, banks have to decide what kind of transactions can be permitted based on the risk profile of the customers for both ‘card not present’ (online) transactions or card present transactions. “For existing cards, issuers may take a decision, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights,” as per circular issued by the RBI under the Payment and Settlement Systems Act, 2007.
“Existing cards which have never been used for online (card not present) / international / contactless transactions shall be mandatorily disabled for this purpose,” it said.
“We have already blocked debit/credit cards of our customers who have never used online, international transactions with effect from Monday. Messages have been sent to customers in this regard, and they can get these services activated if they require through an SMS, call centre or visit to the branch,” a banker with a private sector bank told The Indian Express, asking not to be named.
The central bank said these measures have been taken “to improve user convenience and increase the security of card transactions, especially since the volume and value of transactions increased manifold over the years.
These rules will not apply to prepaid gift cards and those used at mass transit systems.
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