Revolutionary Security Features-Credit and Debit Cards

 

 

 

Reserve Bank of India, vide a single page letter dt.18/02/2009, addressed to the top honchos of Indian Banks, has radically enhanced the Security Levels in Indian EPayment Scenario.

 Unlike face-to-face transactions, all credit card/debit card  payments that take place online are virtually invisible, labeled in the industry as “Card Not Present” (CNP) transactions. Reserve Bank of  India, has taken steps to make such transactions safe. 

          The implications of this Notification will be far-fetched and will usher in revolutionary Security Levels in Indian EPayment’s. Security Levels, which will lead to a spurt, in the EPayment Transactions in our country.

 

          RBI prior to issuance of this Notifiction, has had extensive consultations with Banks/Credit Card companies to increase the security level for  'card not present', transactions. It must have also factored into

01) The various technologies available for this

02)                        The Cost factor to the Banks/Credit Card companies vs customer acceptance.

03)                       The time factor required for adopting this enhanced security levels to existing Debit/Credit Cards.

 

In my opinion, this will be implications of the Reserve Bank of India Notification dt.18/02/2009:-

01) Banks/Credit Card Cos, will issue separate ATM and Debit Cards.

02)                       The Annual Fee for Credit/Debit Cards will go up substantially.

03)                       There will be no  more free Credit/Debit Cards

04)                        IT Industry will be benefited due to the increase expenditure by   Banks/Credit Card Cos.

05)                       Once the system stabilizes, there will be a spike in EPayment transactions. EPayment in India, is yet to pick up momentum, due to the low security levels.

    

 

  

QUOTE

RBI/2008-2009/387

RBI / DPSS No. 1501 / 02.14.003 / 2008-2009                             February 18, 2009

 

The Chairman and Managing Director / Chief Executive Officers

All Scheduled Commercial Banks including RRBs /

Urban Co-operative Banks / State Co-operative Banks /.

District Central Co-operative Banks

 

Madam / Dear Sir

 

Credit/Debit Card transactions-

Security Issues and Risk mitigation measures

 

The use of Credit/Debit Cards has been increasing in the country.  We have been reviewing various options to enhance the security of online card transactions. After extensive consultations with banks/card companies, it has been decided as under:

 

2. It would be mandatory to put in place with effect from August 01, 2009:

 

i)  A system of providing for additional authentication/validation based on information not visible on the cards for all on-line card not present transactions except IVR transactions (for which separate instructions will follow).

 

ii)  A system of "Online Alerts" to the cardholder for all 'card not present' transactions of the value of Rs. 5,000/ and above.

 

3. Banks are advised to strictly adhere to the instructions and time discipline indicated in this circular. Non-adherence to the directives shall attract penalties prescribed under the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

 

4. This directive is issued under section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).

 

5. Please acknowledge receipt.

 

Yours faithfully

 

(G. Padmanabhan)

 

Chief General Manager

UNQUOTE

 

            I would like Reserve Bank of India, to adopt similar rules for Financial Transactions, executed through Bank’s Net Banking Sites.