Come March 16, 2020 there will be new guidelines in place for protecting your debit and credit cards online. The Reserve Bank of India (RBI) has asked banks to put in place a new system for the protection of cardholders. This will result in some inconvenience initially for cardholders but they are in the best interest of the users so it is important to understand the implication of these new rules.
Applicability
This will be applicable for all debit cards as well as credit cards. Often people think about online shopping and relate it to credit cards but even debit cards would have the same rules applicable. Prepaid gift cards like the ones that can be bought at stores and other places that are loaded with money and can be used at specific places are not covered. Neither are cards that are used in mass transit systems like buses and local trains.
New cards
All new cards that are either issued or even renewed after March 16, 2020 can be used automatically at only contact based points of usage. Contact based points of usage means those places where the card actually comes into contact with the machine to clear the usage. This would cover ATMs where the card has to be usually inserted or the Point of Sale (PoS) machines that are found in shops and other establishments where the chip based card has to be inserted.
This means that the new or renewed cards will not be automatically enabled for use online in India. There will have to be a process followed to enable this facility. There will be a facility offered through multiple channels which includes online plus mobile applications plus ATMs or Interactive Voice Response. The facility will also be available at the bank branches.
This will enable the card holder to activate their use for online both in India and abroad plus even for physical use abroad and even contactless use in India. Most new cards issued now have this contactless facility whereby for small amounts they need not be brought into contact with the Point of Sale machine but waving it nearby enables the transaction.
Existing cards
Existing cardholders can find that some of their transactions are cut off because banks have been given the permission to decide whether they should disable the contactless, international and online usage. Banks will be able to do this based on their risk perception of the cardholder. Some users could find this facility withdrawn but they can get it back by following the authorisation process through the system set up by using any of the multiple channels.
Those cardholders who have never used the online, international or contactless facility on their card will find this cancelled automatically from March 16, 2020. So they will need to follow the required process to get the facility working again. There are likely to be many instances where people have multiple cards but they do not use all of them both online or offline. This could lead to having to do the work to get the online facility working again.
Set limits
The real benefit will be in the ability of the cardholder to set the limit for spends online or offline and that too in India as well as internationally. For example a person can set a daily ATM limit of say Rs 5,000 and a Rs 8,000 limit for online transactions on their debit card. The only requirement is that this cannot be more than the maximum limit that has been set by the bank. It in effect gives the cardholder a lot of freedom to reduce the risk on their cards.
The other benefit is that they can switch on or off the facility of usage online or internationally as they want. Plus they can change or modify the limits that they have set earlier so there will be a lot of flexibility present.
Security
This change will enable a higher level of security for the cardholders. The ease of doing these changes will be the key to ensure that the entire process becomes smooth for the cardholder and not a distressing experience. There will also be alerts received on email and SMS when such changes are made so the cardholder will also be able to track if any changes have been made.