The frequency and monetary value of card transactions in India have significantly increased after the expansion of electronic payment options. Financial transactions have become more seamless, but it has also raised the possibility of cyber fraud incidents.
Effective October 1, 2022, the Reserve Bank of India (RBI) has issued new laws regarding debit cards in response to the growing concern over cyber theft.
The goal of RBI's new Guidelines for Debit cards is to reduce debit card abuse. Additionally, they will guarantee cardholders' ease and safety while enhancing the security of card transactions.
5 changes RBI brought for Debit Card rules to enhance user safety & convenience
1. Tokenization: Tokenization is the process of replacing all of an debit card's data with a token -that is required. Merchants must obtain the customer's permission to raise a token to finalise payments. Following approval, the merchant will contact the customer's preferred service provider to finalize the payment. Its goal is to improve cardholders' digital payment experience.
It's safer because neither the service provider nor the retailer will receive the real card information. India has one of the highest incidences of cybercrime, so these modifications are being introduced to reduce cyberattacks. The efforts to preserve this information appeared early to facilitate convenience and encourage quick transactions.
2. Use Only Domestic Cards for Transactions: The RBI has made a big step to support domestic financial institutions and control the reliance on foreign payment networks. You may only make purchases at ATMs and points of sale using domestic debit cards. The goal is to direct money domestically to improve the nation's financial system. It will lessen the risks brought on by swings in foreign exchange rates and lower the transaction costs charged by overseas service providers.
Additionally, it supports the RBI's goal of promoting financial independence and lowering the dependency on foreign networks. It is valid for cards issued after 16th March 2020.
3. Activate Extra Services: In the past, cards were delivered with preapproved services, regardless of the customer's needs. It costs money and makes utilising the required services more confusing. Customers have frequently faced difficulties when a service was not included in the pre-arranged bundle, forcing them to use several cards for different purposes.
But now, you can use your mobile banking apps or online banking portals to directly activate services like foreign exchange, online shopping, and digital wallets. It saves time and lowers the administrative obstacles related to service activation.
4. Enable Services Separately: Following these modifications, you will have more freedom and control while utilising the debit card's associated financial services. Previously, packaged banking services were available to cardholders, mostly which were unnecessary or underutilised.
Now, you can choose which services to enable or disable per your needs under the new regulations. You can contact Kotak 811 to enable the services you need.
5. New Transaction Limits: You can change your transaction limit within your overall card limit. It applies to both domestic and international transactions. You can also enable international transactions according to your needs. Customising your transaction limit lowers maintenance costs and the possibility of fraud.
It's a better approach than the previous one, as service providers used to offer universal limitations to all. It is now legal for banks to impose transaction limitations according to the unique profiles and banking habits of their customers.
You must activate the above mentioned services using Kotak 811 Mobile Banking App to make online purchases, conduct foreign transactions, use contactless payments, and initiate tokenization.
Reasons to introduce these changes
To prevent inaccurate billing: Following these modifications, you can either enable or disable the services, lowering the possibility of unapproved or inaccurate charges. It guarantees proper billing and gives you more control over your funds.
To address unsolicited card problems: Debit card issuance without consent has long been a problem. Following these modifications, you won't get unsolicited cards or services. You can now avoid the hassle and possible security hazards associated with these things.
To preserve client confidentiality: Services that are disabled make sure that private data is not divulged or shared needlessly. The banking industry now has more privacy and trust because of this adjustment. Customers will need to reset their card's PIN if not used for 30 days. It strengthens security and stops the card from being fraudulently used.
To use equitable debt recovery procedures: It is simpler to manage and responsibly repay debts when transaction limitations are customised to each individual client profile. It ensures you are not saddled with excessive debt and encourages prudent financial practices.
To provide grievance redressal: These modifications promote a customer-centric strategy in which banking institutions are responsible for resolving any potential problems. You can report your issues to the institutions directly and receive prompt solutions using notifications and direct contacts.
Conclusion
A major step toward improving financial security and consumer empowerment has been taken with the introduction of the RBI's new Guidelines for Debit cards. These rules are designed to make banking safer and easier for everyone to use by providing more control, enhanced privacy, and efficient grievance resolution.
Enjoy a safe financial path while remaining informed.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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