24/08/2013 – IOB Branches full day working

            On 19/08/2013, i.e just after Sunday, Indian Overseas Bank customers experienced a major disruption in service. This disruption was due to a severe technical glitch in its CBS (Core Banking Software).

            The customers were allowed withdrawals based on 17/08/2013 i.e Saturday day-end balances.

            In the recent past, this was the first instance wherein a major Banks CBS was down for a full working day.

            The present IOB CBS has been developed in-house, and very recently, it has appointed Ernst & Young, as consultants to freeze a new CBS software.

             At the same time, it is also looking to monetize its investments in the stand-alone CBS.

            Reserve Bank of India had advised IOB to shift to Oracle based CBS, as that would have helped in RBIs Automated Data flow system.  

            By 20/08/2013, IOB customers could withdraw monies based on their latest balance. However, it had a cascading effect on clearing operations.  It took another 2 days to stabilize clearing operations.

            In today’s eBanking era, disruption of CBS in any medium/major bank even for an hour creates havoc in the schedules of its customers.

The Hindu

Karnataka examination authority

KEA (Karnataka Examination Authority) – An experiment in ePayment

            The KEA is the nodal agency for conducting CET in Karnataka and also issues the Admission Order to enable the selected students to join the Professional colleges they have opted for.

            The normal procedure to remit the fees was through Demand Drafts or payment via challan in designated Bank branches. This year the Designated Bank Branch was Indian Bank, Malleswaram Branch.

            This year new ePayment options have been added. Students can pay their fees through

Net Banking/Debit Card/Credit Card

And

Challan Payment other than Indian Bank (Through NEFT / RTGS)

            The major drawback in the NEFT/RTGS mode is that the Sending Account Number and Name of the account holder would be of the student’s parent and not of the student. And, also due to communication gap, the Proper UTR number would not be uploaded in the KEA portal. As a result, the KEA officials could not map the NEFT/RTGS payments to the respective students.

            The major challenge in the Net Banking/Debit Card/Credit Card was the slow server response time and also that the limits in the credit cards were not sufficient for the fees amount. But, the main advantage was the ability to download the Admission Order immediately.

            15/07/2013 is the last day to remit the fees, and as such, the last few days were a harrowing time for the parents, students and also KEA officials. By 13/07/2013, most of the issues relating to ePayment mode were rectified. However, officials have promised to review the matter tomorrow.

            Additional reading material:

KEA detailed instructions

CET: e-payment system throws them into a tizzy

E-payment glitches March day 2 of CET admissions

RuPay Debit Card - India’s Own Card launched.

On 26/03/2012, India's own Card. 'Rupay', was launched.

The top 5 features of the launch are : -

1. Rupay payment network was inaugurated by Shri G. Padmanabhan, Executive Director, Reserve Bank of India.
2. Rupay Debit Card launched
3. Rupay Prepaid Card launched
4. Rupay Credit Card to be launched soon.
5. Rupay Debit Card to be accepted at 91,000+ ATM's and 6,00,000+ POS terminals all Pan-India.
6. Bank of India and Union Bank of India, are the first Banks' to offer Rupay Debit Cards to their account holders.
7. POS terminals of Axis Bank, Bank of Baroda, Corporation Bank and State Bank of India, will accept Rupay Debit \ Pre-paid Cards in the initial phase.
8. No initial participation fee and quarterly minimum processing fees. This would encourage Regional Rural Banks, Co-operative Banks and smaller commercial banks to offer ePayments to their account holders.

At present 26.80 crs debit cards have been issued by Indian Banks and in the near future, this number will go up, with more account holders opting for ePayments.

Now, with 'Rupay' in the field, the transaction costs for Banks are expected to go down substantially, Banks will be able to encourage ePayments.  

Security Issues and Risk mitigation measures related to Card Present (CP) transactions – Indian

In continuation of report of WORKING GROUP ON SECURING CARD PRESENT TRANSACTIONS, submitted to RBI on 31/05/2011, RBI, DPSS has started to roll out security measures for ‘Card Present Transactions’.

RBI, DPSS has issued a notification on 22/09/2011, and laid down 3 tasks , for adoption by the various players, in the Cards Industry.

The Press Release can be accessed @ RBI 22 Sept

Broadly the points are :

1. Introduce additional security features for CP (Card Present) transactions. It has been observed, that the reported frauds for CP (Card Present) transactions too are on the rise. This is especially for Credit Cards, which are not yet protected by PIN (Personal Identification Number)
2. One of the options, before RBI  was to adopt e  Aadhaar-based biometric authentication as a second factor of authentication for card present transactions. This option would be reviewed towards the end of December, 2012, to assess the need for a complete switch over to EMV Chip and PIN Technology for card based transactions.
3. (Unique Key per terminal- UKPT or Derived Unique Key per transaction- DUKPT/ Terminal line encryption- TLE) to be live by September 30, 2013. UKPT is a data encryption tool, adapted world-wide in the Cards industry.

                                                              i.      UKPT is a method of generating new keys for use in the DES algorithm from an initial key called a generating or derivation key. This method uses a unique key for every encryption operation and is identified for the decryptor by a serial number combined with an encryption cycle counter, enabling the decryptor to calculate the current key.

4. Enablement of all POS terminals to accept debit card transactions with PIN by June 30, 2013
5. Issuers to be  ready from technical perspective to issue EMV Cards by June 30,2013
6. For international transactions, EMV Chip Card and PIN to be issued to customers who have evidenced at least one purchase using their debit/credit card in a foreign location.

EMV stands for Europay, MasterCard and VISA card standard. It is a global standard based on joint effort by Europay, Mastercard and Visa. Hence, the name EMV.

Europay has been absorbed by Mastercard, in 2002.

EMV cards can be contact based or contactless based.

The main advantages of EMV Contact or EMV Contactless Cards are :

01)  EMV Cards are more secure, than normal cards that rely on data encoded in a magnetic stripe on the back of the card.

02)  The EMV card features a micro-processing chip that stores cardholder data securely, helping reduce the number of fraudulent transactions resulting from counterfeit, lost and stolen cards

03)  A transaction-unique digital seal or signature in the chip proves its authenticity in an offline environment and prevents criminals from using fraudulent payment cards. It is almost impossible to replicate an EMV based card.

04)  Can be used to secure online payment transactions and protect cardholders, merchants and issuers against fraud through a transaction-unique online cryptogram. This is an important security feature, as the numbers of online transactions are increasing day by day

05)  Stores considerably more information than magnetic stripe cards

  The latest trend in EMV cards are dual based i.e the same card can be utilized for ‘Contact’ as well as ‘Contactless’ transactions.

RBI - Report on Securing Card Present Transaction - Public Comments

RBI - Report on Securing Card Present Transaction - Public Comments

Reserve Bank of India, DPSS has turned its attention to ‘secure transactions’, of ‘cards present’.

Here cards might be Credit Cards/Debit Cards/ATM Cards/ ATM cum Debit Cards

To increase the security levels for ‘card present transactions’, RBI had constituted a working group in March 2011, to look into all the related issues implementing the security of card transactions in India and suggesting a road map for migration.

The Working Group had members drawn from Banks and Card Companies and also NPCI representatives.

The Working Group in a short span of 8 weeks, submitted its report today i.e 02/06/2011

The Working Group members have to be praised for their perseverance to submit the report within a short period of 8 weeks.

RBI has invited comments to be emailed or forwarded to them, by 30^th June 2, 2011

The Working Group Report can be accessed @ http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=634

As the electronic money market grows rapidly, it is important that the fraudulent transactions are kept to the minimum, to ensure that the participant’s profitability is not hurt.

It can be noted that the electronic money usage is not only spreading in the urban area, but also spreading in the rural area. The advantages of electronic money are plenty for the rural folks to be attracted towards them.

Over the next month, the report will be discussed thread-bare not only on the internet but also in the print media. 

The more it is discussed, the more comments RBI will receive. The more comments RBI receives, the more robust solution can be found.

By now, articles on the report should have appeared on the Internet.

Promotion Schemes-ePayments-Central Bank of India

Promotion Schemes-ePayments-Central Bank of India

Central Bank of India, is the presenting Sponsor for Big Bazaar's Annual Sabse Saste Din Fair.

This is an Annual Event of Big Bazaar's  hosted every weekend during the Republic Day.
This year Central Bank of Indis is the presenting sponsor for the Mega event. This is a win-win Situation for Big Bazaar and Central Bank of India.

In all the Big Bazaar's advertisments, Central Bank of India logo and name will be prominently displayed.
This will boost the visibility of Central Bank of India

At the same time, a part of the Big Bazaar's advertising costs will be subsidised by the Central Bank of India tie-up.
This historical tie-up also brings additional 5% Cash back on Central Bank of India MAESTRO Debit Cards during these four days!

However, in the Central Bank of India's website, this tie-up is not yet mentioned nor I could locate about the additional 5% Cash back offer.
Trust the Bank has informed its customer's about this offer through other information channels.
However, on Big Bazaar's website, Central Bank of India's logo is prominently displayed.

October 2009, free transactions At ATM’s will be restricted.

  

Come October 2009, the free ride to ATM’s will be restricted.

The Apirl 1, 2009 RBI directive to Banks to remove all charges for ATM Transactions, irrespective of Customer’s Base Bank, seems to be causing havoc  in Banks.

As mentioned  in my posts

  

http://prashantnepayments.blogspot.com/2009/03/all-atm-transactions-pan-india-to-be.html

the number of low-value transactions, is the reason for the cap on free ATM Transactions.

It is understood, that  Reserve Bank (RBI) has fixed third-party ATM withdrawal at Rs 10,000 each time they are used and the number of such transactions to five a month.

It is also understood that  IBA had  recommended a minimum limit of Rs 1,000 on third party ATM withdrawals, this was rejected by the Reserve Bank to protect the interest of small withdrawer.

IBA, which is the industry lobby of Indian banks, had submitted its recommendations to the central bank last month citing the financial burden faced by banks on account of huge number of third-party usage and small-ticket withdrawals.

RBI, which had made third-party ATM transactions free from April this year, has informed the Indian Banks' Association (IBA) in a communication. This decision is expected to be implemented shortly.

------

The highlights are

01)  Number of Free Transactions on 3^rd Party ATM’s - 5 per month.

02) Maximum Withdrawal per transactions on 3^rd Party ATM  - Rs10,000/-

03) Transaction fee subsequent to the Free Transactions - Rs20/- per transaction.

04) As per IBA, it is left to the Individual Banks to charge their customers for 3^rd Party ATM Usage or not.

05) The Decision is to be implemented from October 2009.

My suggestion is : -

01) The number of Free Transactions-per month be 10, and the maximum withdrawal per transaction be Rs.5000/-.

02) Indian Banks Association (IBA) should start a campaign highlighting the benefits of Debit Cards at Merchant Establishments. One of the reasons for the low usage of Debit Cards at Merchant Establishments is the Transaction cost, of 1.5-2% charged by the Merchants.

One nagging doubt, why did not the Indian Banks Association (IBA) or the Member Banks, did not foresee the deluge of Transactions on ATM’s, once the transactions are free.

Switch over to Debit Cards-Reduce the Load on ATM’s

August 1, 2009 – Your Online Transactions will be more secure

  

August 1, 2009 – Your Online Transactions will be more secure

August 1, 2009-The day when the RBI’s Notification regarding an additional level of authentication using information that is not visible on the card, for online credit and debit cards, has to be implemented.

Link to my earlier Post on this Notification is accessible at

http://prashantnepayments.blogspot.com/2009/02/revolutionary-security-features-credit.html

            However, in the last couple of week, articles have started to appear in the media, that the banking industry and card consumers are not yet ready for this feature. And, they are suggesting that Reserve Bank of India, defer the implementation date(01 Aug 2009).

            In my view, the Notification was issued in Feb2009, and 6 months is sufficient time, for the consumers to be made aware of the new rule.

This Notification must have been issued by RBI, after discussions with the stake-holders, and with an view to protect the interests of the customers, service providers.

            It is to be seen, if RBI’s defers the date or prefers the new rule to come into effect.

Let the new rule come into Effect

           

Tit-Bits Debit Card – Bankers understanding its latent potential.

Debit Card – Bankers understanding its latent potential.

More and more bankers are jumping into the wagon of Debit Cards.

This interest in the Debit Cards should benefit the customers at large.

An interesting article can be accessed at http://www.moneycontrol.com/watchlist1/searchnews.php?call=687474703a2f2f7777772e74686568696e6475627573696e6573736c696e652e636f6d2f323030392f30362f31392f73746f726965732f323030393036313935323435303130302e68746d

Banks are looking at the 1.5-2% transaction cost earned by them on each Debit Card Swipe. Majority of the Merchant Establishments pass on this transaction cost to the customers.

I opine that the Banks should

01) Charge the Transaction cost at a differential rate, than at a flat rate, from all industries, depending on the Current Account Float .

02) Encourage Merchant Establishments NOT to recover this transaction cost from the customers, by educating them of the benefits of the Debit/Credit POS Terminal.

What I find interesting is that Andhra Bank too has jumped into the Debit Cards Wagon, by understanding the lower transaction costs in cashless(ePayments) transactions.

Debit Cards-The innovative Vehicle to propel ePayments

Freedom Rewardz-State Bank Group’s Debit Card Rewards Program

Freedom Rewardz-State Bank Group’s Debit Card Rewards Program

Please refer my post, http://prashantnepayments.blogspot.com/2009_04_01_archive.html, wherein I had, forecasted that the new marketing mantra, for banks, will be Debit Card Incentives.

Well, State Bank Group, today kicked off the same, under the Brand Name-Freedom Rewardz.

State Bank of Group has released large advertisements, in leading newspapers.

However, as of now, i.e 7.37 IST, 31/05/2009, no message regarding Freedom Rewardz, is visible on the main page of State Bank of India website.

Trust State Bank Group will also advertise the -Freedom Rewardz Program, through Electronic Media also.

FreedomRewardz is a Rewards Program launched for State Bank Group Debit Card customers. FreedomRewardz, will help you to earn points whenever you choose to buy a product or pay for a service using your State Bank Group Debit Card.

I was expecting, a foreign to launch India’s first Debit Card Incentive Program. However, State Bank Group, has taken the lead, and no doubt, will reap the benefits of the first move.

Kudos to State Bank Group for daring to test new methods to attract and retain customers.

Debit Card Incentives, to be next marketing Mantra for Banks

            Debit Card Incentives, to be next marketing Mantra for Banks   

Now, the Cash Withdrawal from any ATM is free, Banks with smaller ATM Network, are beginning to feel the pinch of the inter-connect fee.  So, they are forced to explore new avenues, to keep the customers happy, and also continue to keep their costs low.

            As I have already said in my earlier Post http://prashantnepayments.blogspot.com/2009/03/all-atm-transactions-pan-india-to-be.html, 60% of the Cash drawn, is used in Locations, wherein Debit Cards are also accepted. 

            Hence, Banks have sought clarifications from Reserve Bank of India, whether prior approval of Reserve Bank of India, is required, for offering incentive schemes, to expand Debit Card usage.  Reserve Bank of India, DBOD(Department of Banking Operations and Development), has clarified that it’s prior approval is not required, as long as there are not of Lottery nature i.e: incentives  based on  chance. 

            It is pertinent to note, that Banks have sought this clarification, only after the introduction of the free cash withdrawals i.e after 01/04/2009. Indeed, Banks have responded quite fast, to the new reality, and quickly explored innovative tactics, to protect their bottom-line. 

            The relevant Reserve Bank of India, DBOD(Department of Banking Operations and Development)  Clarification is reproduced below

 

QUOTE 

April 20, 2009

Offering of Incentive Schemes by Banks to Promote Usage of Debit Cards

Query

A few banks have been approaching RBI seeking approval for offering incentive schemes to debit cards holders to promote debit card usage. Whether prior approval is required from RBI for offering such incentives schemes?

Response

There is no objection to banks offering incentives to promote debit card usage without prior approval of RBI provided no element of lottery or chance is involved in such incentive schemes.

DBOD Mail box clarification dt 20/04/2009

 

 UNQUOTE 

            This clarification is of recent nature, i.e 20^th April, 2009. Hence, Banks will be launching the Debit Card Usage Incentive Schemes, in the next couple of months. We have to wait and see which will be the First Bank, to utilize this clarification, and also the nature of the incentive schemes.

 Any guesses, folks.

 

 

 

 

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. 

10 motivations as to why Customers should choose Debit Card Transactions than ATM Cash Transactions.

 

  

Reserve Bank of  India, vide its communication, RBI / DPSS No. 711 / 02.10.02 / 2008-2009 dt.23/10/2008, had decided that, to start with banks shall reimburse to the customers the amount wrongfully debited within a maximum period of 12 days from the date of receipt of customer complaints. 

         However, as  Reserve Bank of India, was still receiving a large number of complaints that this period was not being adhered to. Hence, RBI  vide  its communication No. RBI/2008-2009/ 380 DPSS No.  1424 / 02.10.02 / 2008-2009 Dt.11/02/2009, has advised banks to strictly adhere to the above time-limit of 12 days. Non-adherence of the time limit would, attract penalties prescribed under the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

 

        The above communication, from RBI, throws fascinating challenges to Banks. One way out, for Banks, is to encourage its customers, to move from ATM Cash Withdrawals, to Debit Card Transactions. It is observed, that 50% of the Cash Withdrawals, is again pumped back to the system, through Cash Transactions, at various business establishments. This is because, of low awareness amongst Bank customers, on the benefits of Debit Card Transactions.

         Banks need to understand the benefits of Debit Cards over ATM Cash Transactions, and formulate efforts to educate the customers.

 Here are 10 motivations as to why Debit Cards are to be favored over Cash or Checks.

01)   They are convenient.

02)   They are easy to use.

03)   They can be an effective budgeting tool.

04)   Money Management and Control. Debit transactions are deducted directly from a checking account and recorded in one place on a monthly statement.  This allows cardholders to easily track where every penny is going and better spend within their means.

05)   Security. Debit cards offer better protections than cash or checks, and Zero Liability means consumers pay nothing for fraudulent purchases.

06)   Acceptance- Debit cards are accepted in more than a crore of locations in India.

07)   International Debit cards can be used at millions of locations worldwide, and can be used over the phone and on the Internet.

08)   Convenience. Debit card transactions are quick and simple, getting you out of the store faster; automatic bill pay via debit eliminates worries about missed payments.

09)   Rewards. More debit cards are also offering rewards so purchases earn points toward travel, merchandise or even cash. 

10)   Most importantly, you have don’t have to worry about, amount being debited, and cash not being dispensed. This will trim down your stress levels also!!!!!!!!