HOW TO STAY SAFE WITH THE NEW CARD PAYMENT SYSTEM

RBI has taken many measures to make the payment infrastructure more secure, but cardholders must also take some basic precaution while using cards at merchant outlets :-

From December 1, 2013, for using your debit card at retail outlets, you need to use your existing ATM PIN. This is as per RBI mandate”.

You may have received a similar SMS from your bank last week. As the message states, you will have to punch in your personal identification number or PIN (the number that you punch at the ATM to carry out transactions) when you use your card at a shop or restaurant (point-of-sale (POS) terminals, in banking parlance) in India. 

“This is a logical extension of the measures the Reserve Bank of India (RBI) has been taking over the last few years to make the payments infrastructure more secure. The second layer of authentication will help debit cardholders carry out their transactions in a secure manner and will certainly reduce frauds as the password is known only to the customer,” says Parag Rao, senior executive vice-president and business head-card payment products and merchant acquiring services, HDFC Bank. However, this does not mean that swiping your card at merchant outlets is totally secure. You still need to take some basic care to ensure that your transaction is completely secure. To begin with, make sure that no one is able to view your PIN while you are entering it. “At present, POS machines at most outlets are installed in such a way that the cashier has a clear view. Ideally, the retailers should provide a separate enclosure for customers to enter the PIN. If such facilities to ensure privacy are not available, you should cover the digits panel while punching in your PIN,” suggests VN Kulkarni, chief credit counsellor with Bank of India-backed Abhay Credit Counselling Centre. 

You also should never reveal your PIN to anyone. Do not let the cashier enter the PIN for you under any circumstances. If you find the entire process cumbersome, it is best to carry cash or withdraw money from the nearest ATM till you get used to the new regime.

In addition, the central bank had also asked banks to replace all magnetic stripe cards that have been used by the holders for international transactions at least once, with the more secure EMV (Europay, MasterCard and Visa) chip-based cards by November 30. If you fall in this category but haven’t received a chip-based card, you need to make enquiries with your bank. Chip cards will also require PIN for POS transactions. The RBI has made it clear that banks will have to bear any loss incurred by the cardholder due to misuse after expiry of the deadlines.

It is not clear whether the compensation structure outlined for customers of banks that failed to upgrade their POS infrastructure will be applicable in case of non-replacement of magstripe cards with chip cards as well. In any case, if you encounter a fraud because of the bank’s failure to issue a chip card, you can always approach the Banking Ombudsman with your grievance. Regular cards used abroad, particularly in certain countries, are vulnerable to skimming and other frauds. Therefore, a chip card, which is not as prone to cloning or hacking, is in your interest. 

“The RBI had given instructions to banks that they should convert all magnetic stripe cards into chip cards and also, that all debit and credit cards will be used domestically only. Those who want to go abroad should get a chip card issued and can spend as per FEMA regulations. Those who have not got chip cards because banks have not issued them will have to get a threshold limit approved, which in any case should not be more than $500 per day. Banks can approve a higher limit after mutual discussions with the customer on the basis of spends made during earlier visits,” says AC Mahajan, chairman, Banking Codes and Standards Board of India. If you intend to travel abroad but do not have a chipbased card, you must inform your bank in advance and have your magstripe card replaced with a chipbased one.

Source : Preeti Kulkarni – Economic Times – 03/12/2013