RBI may tighten credit card norms

MUMBAI: The Reserve Bank of India (RBI) is likely to come out with new norms to ensure card safety. Bankers say that this is likely after a meeting RBI had with banks on Friday to discuss recent frauds in electronic payments. Bankers told RBI that two forensic investigators have been appointed to identify the source of fraud. The investigation is being done by banks that install card acceptance machines in merchant establishments.

"There are three different issues. While there were a number of card frauds, there was also a case of an RTGS fraud and another case of hacking," said a banker present in the meeting. Bankers say that they expect tighter standards to be prescribed for banks while installing acceptance devices in stores.

The central bank has done its best to ensure that transactions in India are completely secure. It had earlier told banks to have an additional PIN-based authentication for credit card numbers by June this year. It has also told acquiring banks (those banks that install point of sales machines) to ensure that all acceptance devices can read EMV (chip) cards by June.

With these additional levels of authentication, RBI has ensured that chances of a fraudulent transaction in India are minimal. Bankers say that there has been a sharp drop in fraudulent usage of cards in India. However, the problem is in international transactions where it is possible to conduct online transactions with the help of even the basic information available on a card. RBI may therefore direct banks to ensure security at the merchant end.

Given that recent frauds have been of high volume, across geographies and across merchants, banks suspect that the breach could have occurred at the aggregator stage. Aggregators are companies that provide solutions for organized retail.