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Reserve Bank of India

Reserve Bank of India putting in measures to prevent credit, debit card fraud

NEW DELHI: After TOI exposed the lacunae in the banking and retail system when it comes to shopping with debit cards, we look at a slew of measures that the Reserve Bank of India is in the midst of putting in place in a bid to make both credit cards and debit cards safer to shop with.

A couple of months ago, two TOI reporters swapped debit cards and shopped at four popular stores at Connaught Place using each other's card.

"We are aware of the issue that you (TOI) have pointed out. That's why we issue guidelines for banks on security and risk mitigation measures for Card Present Transactions (transactions where the card is physically present, unlike online transactions). The guidelines issued in 2011 have a clear roadmap for moving towards more secure ways of credit/debit card transactions ultimately through Aadhar-based biometric authentication," says RBI spokesperson Alpana Killawala.

If the biometric data collected during the Nandan Nilekani-led Unique Identity programme is used for card transactions, a customer shopping with a credit/debit card will have his fingerprints scanned before a transaction is allowed to go through. The fingerprints will be matched with the ones stored in the Aadhar data bank.

Currently, the total industry lost, stolen and counterfeit card fraud is Rs 13 crore. In mid- 2011, RBI came out with a report on securing Card Present Transactions. The RBI has issued a circular based on the report which states that by June 2013, all Point of Sales machines (used to swipe debit/credit cards at shops) must have the infrastructure to support transactions made with a pin typed into the machine. This provides an additional layer of security against stolen cards being swiped at shops. Currently, the signature at the back of the card is the only safeguard against a stolen card being misused at retail outlets. But as TOI discovered, merchants rarely tally the signature on the card and the receipt.

In the short term, the RBI is looking at introducing a pin as an additional layer of security against stolen cards. But the bank is also working towards an alternative to the current magnetic strip on the back of the card, which stores a customer's bank account data and is susceptible to 'skimming' whereby rogue machines can copy the data on the card.

Hence several countries across the globe, including Malaysia, UK and European countries use an EMV chip__a smart chip on which data is stored inside the card__instead of the magnetic strip used in countries such as India, US and China. The EMV chip, coupled with a pin, is a more secure system when compared with the magnetic strip.

While RBI currently aims at moving to a system of using biometric (Aadhar-based) data along with the magnetic strip in order to secure the card, if this fails to take off, RBI wants India to migrate to using the EMV chip-based system along with a pin.

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