The Reserve Bank of India (RBI) has mandated all banks to introduce security features in all credit and debit cards from October 1. As per the mandate, credit and debit card users can register preferences (opt-in/opt-out of services; spending limits, etc.) for international transactions, online transactions, and contactless card transactions.
Users can switch on and off their debit and credit cards for any facility – ATM, NFC, POS, or eCommerce (card-not-present) transaction.
A customer can also enable and disable the NFC (contactless) facility which currently has a limit of Rs 2,000 per day without a PIN
For new cards, the users can only use these services after registering for them.
“Banks can deactivate current cards and reissue them based on risk perception. RBI has asked all banks and other card-issuing companies to disable online payment services of all debit and credit cards that have never been used for online/contactless transactions both in India and internationally. If the cardholder wants to use the card outside India, then they need to ask the bank to enable international transactions," explains Rajesh Mirjankar, managing director and chief executive officer, InfrasoftTech.
According to Gaurav Chopra, chief executive officer, IndiaLends, the main reason for the development is to prevent card fraud and misuse and give the consumer better power to manage his or her finances. With spend and withdrawal caps, even if one becomes a victim of cyber or ATM fraud, the damage will be limited.
Here are key benefits of the new feature, as per Chopra:
Managing of international spends
Many international e-commerce websites neither asks for a CVV pin nor sends a one-time-passwords (OTP) to confirm the transaction. This new move will either restrict international usage and/or have a spending cap which makes sure no misuse happens.
Prevent card fraud
Since the feature allows card users to set a limit on transactions through various modes – ATM, POS, and card not present transactions, it will reduce the damage caused if the card is stolen and missed or if there is a card skimming fraud.
Help in building financial discipline
These features will allow users to cap their spending by transaction type. By setting up a limit that can be changed as per the user's convenience, one can easily build-in discipline with their overall spending.
No impact on the credit card limit
These features will not have any impact on one’s credit card limit and the spend limits or restrictions can be changed any time by logging into the card issuers mobile app or net banking site.
With new features, customers will be able to set a limit on various transactions.
For instance, as Mirjankar explains, a customer who travels to Singapore can activate a global transaction mandate on the card and spend as per his/her needs and can deactivate the same once back in India. This saves both customers' and bank's time in setting up a global transaction mandate.
The apps that banks have already rolled out with these features allow customers to set separate limits for each channel such as ATM, PoS, card-not-present, and NFC, in addition, to be able to revise downward their overall card limit.
This feature will be available 24*7 and will be accessible on mobile banking apps.