Credit Card Frauds to be checked by RBI ruling.

You need not think twice before letting your credit card out of sight at a restaurant, petrol pump or any other merchant establishments from August 1st.The details printed on your card including the card number, expiry date and three-digit card security code (popularly known as the CVV) will not be enough to make fraudulent online transactions.

A RBI directive has ensured that from August, credit and debit card-issuing banks must provide for additional authentication of information over and above what is visible on the physical card. In other words, the cardholder must key in an extra security code or some other data to complete a online transaction.

This consumer-friendly instruction, issued by the RBI on February 18, also mandates a system of online alerts to the cardholder for all `card not present' transactions that exceed Rs 5,000. The circular adds that banks would be penalised for non-adherance to the directive under the Payment and Settlement Systems Act 2007.

In an email response to TOI, RBI though specifies, "Banks are free to decide on the technology they wish to use to fall in line with these instructions.'' On their part, banks have been beefing up their online security. Virtual cards, which have been around for a while, are a secure option offered by the likes of HDFC Bank, ICICI Bank and Kotak Mahindra Bank. HDFC Bank's NetSafe, for one, creates a code that can be used for one-time transaction. "It is a limited period validity number,'' says Sanjeev Patel, EVP and head, direct banking channels, HDFC Bank.

Virtual cards create a code separate from your CVV number so you don't have to key it in on the merchant website. Any unused amount from the card is credited back to the credit or debit card account.

Banks also offer increased security via Master card's Securecode and Visa's Verified by Visa, which offer personalised passwords. T V Seshadri, vice-president and country general manager, South Asia, MasterCard, says, "Much like the authentication process required for payment card use at ATMs, SecureCode requires cardholders to enter their personal code in an online window on their PC before a transaction can be processed. Even if someone knows their credit or debit card number, the purchase cannot be completed without their SecureCode at a participating merchant.''

But these initiatives can work only if the cardholder is prompted to enter the code by the merchant site. Says Seshadri, "The card-issuing bank, the retailer and the retailer's acquiring bank will all have to participate. Even if one of these entities does not participate, the cardholder is not prompted to enter the SecureCode.'' Seshadri, though, adds that a number of banks in the country no longer allow their cardholders to transact on e-commerce sites without entering such the code

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We pay more with Credit card than by Cash.. Know Why.

A Colleague of mine recently attended an auction where he bid for a certain old clock. Few weeks later, he noticed a similar clock on e-bay. He ended up buying it at almost 40 per cent higher price! As natural economists, we should be interested in knowing why my friend paid such a premium. The answer lies in our (economic) behaviour with credit cards. What of it?

Consumer behaviour

We all make impulsive purchases with credit cards. You are window-shopping and then you see this interesting object that could add character to your living room. The object — a piece of modern art that is difficult to describe — is expensive. But you can use your credit card to make the purchase. You do so! Why?

Paying cash is painful. Economists have conducted several experiments to document consumer behaviour. We buy only if we believe that the utility that we can derive from the product is greater than the pain we will suffer from paying for it.

Credit card alters this equation. It numbs the pain of payment, as cash moves out of our bank account several weeks later. My friend paid 40 per cent more for a similar clock. Did the mode of payment (credit card for ebay) have anything to do with it? My friend denies so. But research conducted in similar area suggests that credit cards could be a factor driving the economics.

Credit-card premium

Consider this. Two professors conducted a real-life auction for buying tickets to a certain game in the NBA league. Half the subjects had to pay cash and the other half, credit cards. The study found that the average bid through credit card was twice as much as that of the cash bid! The authors called it the credit-card premium. The reason for such premium is the same — the pain of debit is less with plastic than with cash. So, we yield to the temptation, spending way beyond our means. And that could drive a huge hole in our bank account — eventually.

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Credit Cards during foreign travel - Points one must take care

While credit cards are accepted at many million locations worldwide, there still may be times when cash is your only payment option. However, you should be cautious of carrying too much cash around. Despite the rather ingenious methods people have created, such as hiding cash throughout their luggage or on their bodies, cash can nevertheless be lost or stolen. And if it is, it cannot be replaced, like a card. Carrying a credit or debit card is, therefore, much safer than carrying cash or travellers cheques.

If you hold a MasterCard, for instance, you would have the protection of the MasterCard “zero liability” policy. To qualify for zero liability protection, you must meet certain conditions including having exercised vigilant care in safeguarding your card and immediately notifying your issuing bank of the loss, theft or unauthorised use of your card.

This apart here is a simple list of tips for travellers using their credit or debit cards abroad:

* Before you leave, check the expiry date and credit limit of your card. You don’t want to arrive at your destination and find that your card has either expired or reached its limit. Also, if you find that you’re near your limit, you might be able to increase it through your bank.

* Contact the bank that issued your card and let them know where and when you’ll be travelling. This is strongly advised so that the bank is aware that overseas transactions will be made. The unfamiliar spending patterns could cause your bank to suspect that your card is being used fraudulently and thus delay your card purchase approvals.

* While you have your bank on the phone, ask if you need to change your PIN number so that it will work in the country you’re visiting, as some foreign ATMs often only accept four-digit PIN numbers. If it turns out you that you do need to change it, ask how to go about doing so.

* Make several photocopies of the front and the back of the credit and debit cards that you’ll be taking with you on your trip. Leave one copy with a relative or friend back home and carry the other with you. Also write down your bank’s emergency contact information. This way, if your card is lost or stolen, you can quickly provide your bank with all the necessary information needed to have it cancelled. Better still, contact MasterCard Global Services directly who will put you in touch with your bank.

* When making purchases, ask whether your card will be charged in the foreign currency or in your country’s currency. An increasing number of merchants are equipped to convert the cost of a transaction to the cardholder’s own currency, but they often will impose an additional service fee or use an exchange rate inferior to that used by the credit card companies.

* Consider taking more than one credit/debit card with you. You’ll want to keep them in different places. This way, if one is lost or stolen, you’ll have a backup.

* If your card is lost or stolen, you can cancel it and the money remains in your account, provided whoever stole your card didn’t use it before you were able to phone your bank and cancel the card. With cash, if it’s gone, it’s gone for good and cannot be traced.

* If you use a credit card to book a hotel or hire a car, the company may put a hold on your account for the total amount of your expected bill. This could be an inconvenience, especially if it ties up your entire credit card limit. Again, a second credit card might come in handy. Do make sure, though, that the company removes this hold once you’ve paid the bill.

* Some banks offer you free travel insurance if you pay for your overseas flights with your credit card. This means that you are covered in the unfortunate event of a medical emergency, trip cancellation or baggage losses.

It is advisable that you double check what your insurance covers and whether you will need additional top-up coverage, as most banks offer a basic travel insurance package.

It is of little wonder, then, that credit and debit cards have come to be regarded as the best way to pay for expenses while travelling abroad.

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Credit Limit chopped without notice - File a Case

Not all consumers learnt about the recent lowering of credit limits by card-issuing banks the usual way—via a bank statement , email or SMS. According to a senior Mumbai banker, they learnt about the sudden development only when their card swipe transaction was declined at a merchant establishment. The banker says aggrieved consumers can file a complaint at the banking ombudsman on two counts.

One, for not being informed about the change. According to the Banking Codes and Standards Board of India , an independent banking industry watchdog, banks must notify any change in fees or charges, through the website, statements of accounts , email, SMS alerts and notice board at branches — 30 days before the revised charges become effective.

Not informing consumers is a violation of the Code of Bank’s Commitment. “Banks sometimes try to wriggle out of their responsibility of informing customers by saying that the statement (to the effect ) had been mailed. But they have to prove that it was received by the customer by producing a copy of the acknowledgement along with the date of issue of the statement,’’ says the banker.

Two, the consumer can file another, deficiency in service case for “loss of face’ ’ one suffers when a card transaction is rejected in public. Consumers usually do not report one-off denial of card swipe, although it can seriously embarrass and inconvenience them, especially at a restaurant, a medical facility or while paying for tickets.

Such a situation could arise vis-a-vis debit cards too. A Mumbai resident, who recently produced his debit card at a supermarket, was shocked to learn that his transaction was denied. The counter executive could not swipe the card more than twice, because after a third unsuccessful swipe, it would get automatically blocked. The consumer was all the more worried about his account balance. He called up the bank helpline and was relieved to learn that it was safe

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Credit card Security - few things to be learned

Credit cards are loaded guns that can go off any minute emptying your life savings if you aren’t careful.

The Payment Card Industry (PCI) Data Security Standard, which has a set of regulations for credit card security over the Internet, is not a government regulation and therefore merchants or service providers cannot be held legally accountable when thin gs go wrong. Recently, the RBI issued a notification to all banks to implement a system of providing for additional authentication and online alerts to cardholders for all “card not present” transactions of the value of Rs 5,000 and above.

This system becomes mandatory from August 1, 2009, and banks have been advised to adhere to the instructions.

Amuleek Bijral, Country Manager, India and SAARC, RSA, the Security division of EMC, says, “These directives from RBI strengthen the need for looking at 3D Secure solutions. ”

RSA’s 3D secure technology is designed to reduce the possibility of fraudulent card use by authenticating the cardholder at the actual time of the transaction.

Bijral says, “3D Secure is an industry standard. It was Visa’s attempt to put the ‘signature’ into an e-commerce transaction. Card holders assign a password to the payment card through enrolment. The participating merchants and banks also require the password with each e-commerce transaction.”

How do 3D Secure solutions work?

3D Secure is the payment industry’s internet authentication standard and covers three domains: Acquirer Domain (the merchant and the bank to which money is being paid), the Issuer Domain (the bank which issued the card being used) and finally the Interoperability Domain (the infrastructure provided by the credit card scheme to support the 3-D Secure protocol).

Hence, the name 3D Secure; securing all three domains.

A significant proportion of chargebacks can arise as a result of the cardholder denying that they authorised a transaction.

The 3D Secure technology is designed to reduce the possibility of fraudulent card use by authenticating the cardholder at the actual time of the transaction and subsequently reducing the merchant’s exposure to disputed transactions and chargebacks, says Bijral.

3D Secure can be thought of as an online version of ‘Chip and Pin’ technology, whereby the cardholder has a personalised password registered with their card that is entered during the checkout process.

Enrolling for 3D Secure benefits both the enabled merchants and the cardholder as the former will avoid liability from chargebacks relating to fraud and clients can be assured that no one else can use their card, he says.

Basic do’s and dont’s

Bijral also stresses the often-listed security steps for credit card use.

According to Bijral, at an individual level, RSA is advising customers to give as little information as possible and, if a Web site insists on information that doesn’t seem relevant and can’t justify its request, to leave the site immediately.

The security specialists are also reminding customers to choose strong passwords and update them regularly and to clear the cookies to increase protection against potential hackers. Also, when visiting a Web site, RSA recommends that customers go with companies they have heard of and also make sure the Web site address doesn’t change or re-direct to another site.

A closed padlock or key should appear on the page being browsed, letting you know your personal information will be encrypted or scrambled.

Do not respond to e-mail or click on Internet advertisements that promise you free gifts on special days. You should switch on the anti-phising feature of your browser, he stresses.

RSA also recommends avoiding the use of shared computers for financial transactions.

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CIBIL and it's siblings - Equifax, Experian and Highmark

Three more credit information companies are into business after the RBI approval. But the existing local credit bureau Cibil (Credit Information Bureau India Ltd) is only approved by the banking regulators to maintain credit histories of insurance and telecom customers.

EquifaxCredit Information Services, Experian Credit Information Company, and Highmark Credit Information Services are the three new entrants. These entities were short-listed from 13 applicants including Cibil. Business for credit bureaus is expected to grow given rising defaults in consumer credit and growing risk consciousness among lenders.

Credit information companies inform banks whether a prospective borrower is creditworthy or not based on his past payment track record.

Among the new entrants Equifax, is US based and Experian an Irish company in the credit information business. Both have a long-established transnational presence. Highmark is a start-up promoted by individuals Anil Pandya and Anuj Desai.

With more players in credit information, competition is expected to hot up. Arun Thukral, managing director, Cibil, said that the approval allows it to extend service to more industries including insurance and telecom, which will help widen its customer base. Commenting on the competition that would emerge with the entry of more players, Mr Thukral said that in advanced markets companies rely on credit information from more than one source and new entrants would not eat into Cibil’s business. Cibil has close to 164 members from the financial sector that use its database.

Richard Fiddis, managing director, Emerging Markets at Experian said, the company has for now got a provisional licence to set up operations. Experian has already received the approval of the Foreign Investment Promotion Board to invest 49% in the venture. It had identified six local partners, but refused to divulge their names as well as the amount of money it was proposing to invest in the venture.

Cibil was originally promoted by SBI (40%), HDFC (40%), Dun & Bradstreet Information Services India (10%) and Trans Union International (10%). Subsequently, the company inducted more investors including ICICI Bank, HSBC, StanChart, Citicorp, Bank of Baroda, IOB, Sundaram Finance, Bank of India, GE, UBI and PNB. ICICI Bank, SBI, D&B and Trans Union hold 10% stake each in Cibil. Others own 2.5%-5% each

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Card Protection Program an Introduction

History
The CPP Group Plc was founded in 1980 by Hamish Ogston who is currently the Non-Executive Chairman. Headquartered in the United Kingdom, the CPP group operates internationally via offices in the USA, Germany, Ireland, Italy, Portugal, Spain, Turkey, Hong Kong, Singapore, Malaysia and now also in India.As a pioneer and global leader in the assistance services market, we have more than 10 million satisfied customers, 280 business partners and a staff of over 1,700 worldwide. We work with many of the world's leading card institutions, providing our market leading products and services to their customers.

Assistance services
Assistance services is about people taking advantage of the opportunities and choices that result from the increasing complexity, mobility and pace of modern life.As the use of plastic cards has grown exponentially across the globe, and as lifestyles have become increasingly frenetic, dynamic and fast paced, the need for services that remove complexity, deliver support in difficult situations and provide reassurance every day, has never been greater.Our assistance products and services are designed to simplify the complexities of everyday living whether these affect personal finances, home, travel, personal data or future plans. When it really matters, CPP Assistance Services enable people to live life and worry less.

*Credit Card Protection Program FAQs

CPP Assistance Services, India
CPP Assistance Services, India is part of the CPP group, a pioneer and a world leader in the emerging assistance services market. We help people deal with some of the frustrations that come with a faster pace of modern life. CPP launched card protection in Asia as far back as 2004, starting with Hong Kong, followed by Singapore, Malaysia and now India.CPP is here to cater for India's growing assistance services needs. CPP has launched its flagship card protection in partnership with card issuing institutions.

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Card Protection Program (CPP) Clarified

Here are the answers to some of the general questions that people ask about CPP. For any other queries, please call the CPP helpline number - 6000-4000 (Prefix city STD code if calling from a mobile phone).

Why should I buy a CPP Card Protection membership?
When you realise that your wallet is missing, it's a race against time to have all your cards stopped immediately. With CPP Card Protection, all it takes is one free call to the customer service team and they will contact your card issuers to have your cards cancelled within minutes. So no matter where you are in the world, CPP will take care of it for you.

*CPP History

What does my membership cover?
A summary of the benefits you are entitled to is as follows:

• One free call to block all your cards
• 24 hour toll free helpline
• World wide cover
• Emergency travel & cash assistance
• Fraud protection
• Valuable document registration

Lost card replacement assistance The details are contained in the membership guide and terms and conditions which come with your welcome pack.

How can I purchase a membership?
To buy Card Protection call CPP on 6000-4000(Prefix city STD code if calling from mobile phone)

------ Classic plan Premium plan
Single - Rs. 995/- Rs. 1295/-
Joint - Rs. 1495/- Rs. 1945/-

How can I pay for my membership?
CPP accept payment by Visa and MasterCard. The annual fee is deducted as one lump sum at the beginning of the membership and is automatically applied each year until you advise otherwise

When will I receive my welcome pack?
Normally, you should receive the welcome pack within one week from the date the payment is confirmed.

What is in the welcome pack?
The welcome pack contains the following items:
-A confirmation letter outlining your membership details.
-A registration form for you to register all your card details.
-Terms and conditions of the membership.
-A membership guide listing all the benefits you are entitled to.
-Key fobs and reminder stickers which will help serve as reminders of CPP contact numbers.

How long is a membership period?
Your membership runs continuously for one year from the membership effective date.

How do I renew mu membership?
Six weeks prior to the expiry date of your membership, CPP will send you a reminder letter advising that your membership is due for renewal. CPP will take payment from the same credit card as in the initial membership unless otherwise advised by you to debit an alternate.

Can I cancel my membership anytime?
When you first purchase the membership, you have a 30 day cooling off period when you can cancel the membership and receive a refund if no claims have been made.

How do I register my cards?
There are 2 options for registering your card details.
Mail - You can complete the registration form, found in your welcome pack and return it to : CPP Assistance Services Pvt. Ltd.PO Box No. 4337,Kalkaji Post OfficeNew Delhi - 110019
Phone - You can call CPP on 6000-4000 (Prefix city STD code if calling from mobile phone)

Why do I need to register my cards?
Your cover starts as soon as CPP have confirmed payment. Therefore, we recommend that you register your card details with CPP as soon as possible. By doing so, CPP will be able to cancel your cards right away to avoid card fraud taking place.

If I lose my cards, how do I report the loss?
As soon as you have discovered the loss, you should call CPP's lost and stolen card helpline on 6000-4000 (Prefix city STD code if calling from mobile phone) as soon as possible to report your loss. CPP will then contact your card issuers immediately to cancel your cards.

If I am abroad and I find that my wallet, travel tickets and passport have been stolen, what should I do?
When you discover the items are missing, immediately call CPP's lost and stolen card helpline on 6000-4000 (Prefix city STD code if calling from mobile phone). CPP's specially trained agents will be able to guide you through the whole process. It's first priority will be to cancel the lost cards. CPP will then advise you how and where to receive a replacement passport. Finally, CPP will assist in the re-issuing of travel tickets so that you may return home.

How can I pay for my hotel expenses?
You should inform CPP that you would like assistance with the hotel payment. CPP will then liaise with the hotel and advance the expenses to pay the hotel directly.

How do I make a claim?
Should you ever need to make a claim, please call CPP on 6000-4000 (Prefix city STD code if calling from mobile phone) and they will send you a claim form. The form needs to be completed with as much detail as possible and then returned to CPP with original documents for processing.

Is there any time period limitation for submitting a claim?
All claims must be received within 28 days from the date of reporting card loss. Please remember to include all the documents that CPP ask for, including original receipts (not photocopies) for any expenses claimed for. If you do not, CPP will not be able to process your claim until we have received them.

Who can I contact if I have any questions relating to my membership?
You can call the customer service helpline on 6000-4000 (Prefix city STD code if calling from mobile phone). The lines are open 24 hour a day, seven days a week.

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StanChart's SmartTravel FX card

Standard Chartered Bank has launched SmartTravel FX card, a gold pre-paid travel card that can be used for making payments in international currencies --US dollar, Euro and Sterling Pound.

The card can be pre-loaded with any amount subject to limits prescribed by the Reserve Bank for international travel, a release issued by the bank has stated.

All transactions made on this card, while being billed in the base currency, are treated as local transactions and will not incur additional cross-currency charges levied on all international and credit cards.

Standard Chartered's General Manager, Consumer Transaction Banking, Sai Narain, said "the new SmartTravel FX card combines extraordinary convenience with safety. The currencies in which the card is denominated are universally accepted, which makes the card valid across most countries Indians travel to."