RBI asks issuers to provide facility to switch on, off cards to prevent frauds
The Reserve Bank of India (RBI) on Wednesday asked banks and other card-issuing companies to provide a facility to customers to switch on and off their debit or credit cards, a move aimed at enhancing security for digital transactions.
As over the years, the volume and value of transactions made through cards have increased manifold, the RBI also said that at the time of issue or re-issue, all cards (physical and virtual) should be enabled for use only at contact-based points of usage (ATMs and Point-of-Sale (PoS) devices) within India.
Issuers should provide cardholders with a facility for enabling card not present (domestic and international) transactions, card-present (international) transactions, and contactless transactions, the RBI said in a circular while prescribing certain norms.
Card not present refers to online transactions.
"...facility to switch on/off and set/modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions -- domestic and international, at PoS/ATMs/online transactions/contactless transactions" should be provided on a 24x7 basis through multiple channels, it said.
The channels should include a mobile application, internet banking, automated teller machines, or interactive voice response.
The RBI further said that 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.
"Existing cards which have never been used for online (card not present)/ international/ contactless transactions, shall be mandatorily disabled for this purpose," it added.
The latest instructions, however, are not mandatory for prepaid gift cards, and those used at mass transit systems, the RBI added.
The latest instructions assume significance amid rising instances of cyber frauds.
In August 2019, the Reserve Bank of India asked banks not to count failed transactions at ATMs due to technical reasons as part of "free ATM transactions" permitted every month.
Besides, the use of ATMs for balance enquiry and fund transfers too, should not be part of the free transactions facility given to a customer.
(Edited by Suman Singh)