Debit & Credit Card: New Rules by RBI

A look into the new guidelines introduced by the RBI for debit and credit cards for the prevention of fraud and protection of the end users in India.

Thu Jun 23 2022 | National & Social | Comments (0)

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Recently, the Reserve Bank of India (RBI) has brought about some monumental changes within the rules governing the debit cards and credit cards in India. This move has been made with the primary goal of creating a much more secure and highly convenient system for all such debit and credit card transactions throughout the country. These transactions have come into effect from October 1st, 2020.

The changes implemented by the RBI are extremely critical and it was pertinent to have introduced  these new measures due to the rising number of fraudulent transactions which occur through online transactions in India. The new guidelines are aimed at providing more security over all online debit and credit card transactions and making them more reliable for forging ahead with the current digital revolution wherein India is becoming more digitised and the instances of making online transactions is the new norm.   Some of the facets of these new guidelines include the fact that all credit card and debit card users shall now be allowed to set their preferences, which means that they can now opt-in and opt-out of services, set transaction limits and so on.

Certain highlights of the changes implemented :

  • Any and every new credit card or debit card which has been issued by the banks can only be enabled for domestic transactions at ATMs and point of sale (PoS) terminals and nowhere else.
  • Every such debit card and credit card user shall now be permitted to set up transaction limits on their own.
  • All the credit and debit card users have now been provided with the option to opt-in or opt-out of services over their credit card and debit cards, such as online transactions through e-commerce, international transactions along with contactless transactions as well.
  • The Reserve Bank of India (RBI) has guided each and every bank and every card issuing company to disable all online payment options for any such debit card or credit card that has till date, never been utilised for any online or any contactless transaction within India or abroad.
  • Every such individual who is looking to opt-in or make any changes to their existing debit card or credit card can do so by approaching their respective bank’s mobile application or via means of internet banking. After they enter their user id and password, they are required  to go to the requisite cards section and click on manage cards , post which, they are authorized to make all the necessary changes according to their choice or need.

Some of the key benefits that these new rules :

  • The new rule which states that at the time of issue or re-issue, all debit cards and credit cards shall be enabled for use only at ATMs and Point of Sale (PoS) devices within India, provides much more security to the consumers with little to no chance of fraud.
  • In case the customers want to use their debit cards or their credit cards outside India, they would now require to make a request to their banks for such a facility. Prior to this notification, almost all the banks issued cards that, by default, could be used anywhere in the world, without any permission which led to greater risks and instances of fraud. This issue has now been completely eliminated with this new rule in order to protect customers from the large number of frauds occurring all over the world.
  • For all of the already existing debit cards and credit cards, the issuers are now permitted to make a more informed decision on the basis of their perception of any risk involved on whether to disable the card that is not present (domestic and international), the card which is present (international) and all contactless transaction rights which provides them with greater security.
  • Each and every bank and every card issuing company has now been directed by the RBI to disable online payment for all debit and credit cards which have never been used for online or for contactless transactions in India or abroad whatsoever, to keep a track on all such transactions made otherwise.
  • According to the new guidelines, people are now allowed to be able to register for select preferences such as opt-in or opt-out services, spend limits as well as other services for online transactions, international transactions and contactless transactions which were not available before and thus providing customers with a greater range of options and services in totality.
  • All the users shall now be provided with a 24x7 access to the switch ON/OFF or to change all transaction limits through every available channel such as, mobile applications, internet banking, ATMs and Interactive Voice Response (IVR).
  • Almost every bank has been issuing cards based on near field communication (NFC) technology and thus a merchant is not required to swipe these cards or insert them at the point of sale terminal. These are also known as contactless cards, which are way safer and more convenient to use. Moreover, all card holders shall now also be provided with the option to enable or disable the NFC features as well.
  • Each and every card holder, now has the option on both debit and credit, to be able to set up a certain limit for transactions. This, in turn, helps keep all possibilities of frauds or excessive transactions in check and makes it almost impossible to occur.
  • These new RBI regulations apply to debit and credit cards only. Any prepaid gift card or those used at mass transit systems (such as metros), are not covered under this and it is very important to note this as this is a complete banking safeguard.
  • The current guidelines and directions have been issued under Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), as per the RBI, making it clear that any act found in contravention to these rules or guidelines or any provision of this Act shall be punishable under the law.

Conclusion

It is evident now that these guidelines and measures are of great significance now, especially at a time when there has been a stark rise in white collar crimes and amid rising instances of cyber frauds. These new rules will make debit and credit cards more secure and curb their misuse on all fronts and thus, this  new measure is a welcome change and ought  be kept in mind by all debit and credit card users.

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