RBI bats for more safety with new card rules

RBI bats for more safety with new card rules
The RBI, in its circular dated January 15, 2020, announced new rules pertaining to the use of credit cards and debit cards. These rules were announced in the light of the increasing number of online and offline frauds related to the usage of cards. The impact of these announcements could be far reaching for users of debit cards and credit cards and assumes significance in the light of the increased usage of digital modes of money. The new changes will come in effect from March 16, 2020. Here is what you need to know.

International transactions have to be specifically enabled
While this rule will not be applicable to existing cards, they will apply to all new cards issued and also to renewal of cards when cards are reissued. This is applicable to debit cards and credit cards. Cards will be enabled for use at Points of Sale (POS) and at ATMs only within India. For enabling international transactions, the customer will have to make a specific application to the bank to enable the same. This is in contrast to the present system where most cards come pre-enabled for international transactions. Now irrespective of whether you want to use these cards for offline or online transactions in international currency, a specific application for activation must be made to the bank. Till then such international transactions will not be permitted on cards.

There is a small catch here. If you already have an internationally enabled card that has never been used for any international transaction, then that will also be disabled for international transactions on March 16, 2020. Hence, if you want to keep the international transaction ability active, then you can do a small international transaction on the card before March 16, 2020, failing which you will have to make a fresh application to your bank for the same.

Contactless card facility will also be request based only
Currently, like in international card issuances, Indian cards are also offering contactless card swipe facility. This is currently valid in India only for transactions up to Rs2,000. In such cases, the POS does not have to insert the card into the machine slot and you don’t need to impute the PIN number. You just pass the card over the POS machine and the transaction amount up to Rs2,000 automatically gets debited. This is only possible where the card and the POS machine are enabled for such contactless transactions.

Effective March 16, 2020, even such contactless transactions will only be request based. Unless you make a specific request to your bank to enable such contactless transactions on your card, that facility will not be permitted. Like in the case of international transactions, if you have never used your card for contactless transactions, then the same will also be disabled from March 16th 2020. Hence, if you want to continue the facility, you can make a small contactless transaction on your card before March 16, 2020 to keep the facility active on your card.

Card issuers to make additional flexibilities available to customers
To reduce the incidence of frauds, the RBI has made it mandatory effective March 16, 2020 for the banks and card issuers to provide the following.
  • Facility to switch off and switch on the limits on the card through user-friendly interfaces like the internet interface, mobile interface and also the call centre interface.
  • Facility to define and modify limits on the card within the overall credit limit provided through user-friendly interfaces like the internet interface, mobile interface and also the call centre interface.
  • Customers should be offered the facility to set granular limits for sub-categories like ATM limits, international transaction limits, POS limits, etc.
  • Provision of alerts and updates when any such changes are made directly to the registered customer via mobile and email
Remember that these restrictions will not be applicable to pre-paid gift cards and to mass transit cards. These changes are likely to increase the administrative costs for the card issuers and that could lead to higher fees charged on cards. For the customer, this will mean some inconvenience but that also comes with the promise of greater safety and security. That is a worth a lot, for sure!

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